Author gives the following arguments as to what would have happened if there were no bailouts :
* Unemployment, which is dogging our nation right now with an official rate just under 10%, could have easily risen to 25% and beyond, just like during the Great Depression.
* The disruption that would have played out if the banks had frozen up would be disastrous. During the height of the crisis, The author was joined on the Squawk Box set by a guest host whose firm now manages over $1 trillion in assets. During one commercial break, he confessed that he had recently told his wife to go to the bank and take out as much money as possible, because he wasn’t sure the ATMs would be working the next day.
* The smartest people, the ones with the most intimate knowledge of what was happening in the markets, all thought things were even more dire than government officials were letting on at that point.
1) Unemployment, which is dogging our nation right now with an official rate just under 10%, could have easily risen to 25% and beyond, just like during the Great Depression.
A) Unemployment is actually at 18% (U-6) and real economic dislocation, (forced early retirement, decrease in labor market, and two earner housholds reduced to 1 earner households have REAL unemployment at 22%) Just like an Obamabot to say that $800 Billion is a good price to pay to save 3% points off UE numbers. I suppose she thinks that the UE rate has dropped .2% points due to economic activity.
2) The disruption that would have played out if the banks had frozen up would be disastrous. During the height of the crisis, The author was joined on the Squawk Box set by a guest host whose firm now manages over $1 trillion in assets. During one commercial break, he confessed that he had recently told his wife to go to the bank and take out as much money as possible, because he wasn’t sure the ATMs would be working the next day.
A) Typical Leftist claptrap. NAME NAMES. It would have been a public service that some idiot responsible for $1 tril of other peoples money would be so insane as to believe that his wife would have to rescue his shekels from the bank BEFORE he could get out of work should be FIRED! There was no run on ANY banks save for the one that was caused by Chuck Schumer. The bad banks would have been gobbled for market share by the more nimble, less piggish banks that would have loved to feast on the customers of the bloated bureaucratic megebanks. The investors would have lost their money, as they should have, just like the stockholders in GM, and the bankruptcy laws would have carved up the TOO big to fail banks and old off the quality assets t the highest bidders, as should have happened. The average everyday saver would have been protected with the FDIC and the prolonged economic problems of this slush fund would not exist now.
What actually happened was typical Crony Capitalism at it's worst. My profits are my own and my losses are the tax payers.
3)The smartest people, the ones with the most intimate knowledge of what was happening in the markets, all thought things were even more dire than government officials were letting on at that point.
A) Oh, you mean the smart guys that came up with the derivatives in he first place? Those smart guys? The ones that thought that NINJA loans and 120% equity, no appraisal, no money down financing in the housing market was a great and secure investment? Those guys? Yea, I can see why the author would listen to them!
Facts are facts! The fact is that the bailouts where a complete RIP OFF of the American public. They where a direct result of Government intervention in the markets and they have sowed the seeds for the abortion of a financial “reform” bill that will stifle the economy for decades.
This piece has to be a rip-off of the unicorn that craps skittles story or Dire Straits ‘Money for nothin’ and your chicks for free’...........
“The smartest people, the ones with the most intimate knowledge of what was happening in the markets,....”
I’ve got a book sitting on my library shelf titled “The Big Short” by Michael Lewis. Point clearly made by him is that the big hedge fund managers and financial institution CEO aren’t all that smart.
Government has the power to fix the problem in the short term by bowering and printing money. However in the long term the situation becomes even more dire than what it would have been. Much of the problems we have faced is due to government policy, lack of enforcing existing law, ideological economic education in our schools, changing previous laws to favor a select few on the financial street at the cost of main street, total corruption of our political and financial system with people who are very much liberals, i.e. statists at heart. I can only imagine what the carnage and the hyperinflation we are going to face in the next few years is going to due to our economy and our society because we couldn’t take the pain that normally goes with cycles in the economy or from bubbles created by government in order to avoid them for a short time only making it worse. People only learn from pain on what not to do, but if there is too much then you may end up killing the patient or make them go insane.
Also, let’s see, U6 (I believe that is the better measure for unemployment), is above 16%. The reason why it’s not higher is because there is a certain level of economic activity required for just keeping things afloat. But the last I looked we have higher taxes coming next year due to expiring tax cuts, increased taxes from the Health care and the financial ‘reform’ bill, the EPA trying to shut down oil drilling and oil extraction among other industries. No doubt we will get Cap and Tax this year and whatever else in the lame duck session of congress. Once you make it impossible to keep things afloat then it becomes every man for themselves. And if anyone thinks unemployment is high now, baby you haven’t seen anything yet!
And yes I think the situation was dire before. A lot of disruptions would have taken place, but you know what? People would have survived and been innovative. New business models would have already been developed out of this disaster if they were left to their own devises, i.e. keep the government control freaks out of the way. But now we have more regulation, more spending by government, takeover of corporations reminiscent of the communism and fascism of the 20’s and 30’s. And we are just getting started. Some prices are just too high despite what the short term consequences will be.