Posted on 04/09/2008 6:50:07 AM PDT by Toddsterpatriot
Ping!
Cue the “Aw Jeez” guy. :)
Thanks for posting this.
So we’re still all gonna die, right?
5....4....3....2....1
I read here on FR that JPM got $30 billion in free money hot off the Federal Reserve’s printing presses. Who to believe?
This is true because of the fact that any time a private entity needs a government loan guarantee, it means it cannot get a loan from the private sector. Of course, the main reason for a private entity not being able to get a loan in the private sector is because the private sector doesn't believe the entity is capable of paying back the loan (in a perfect world, at least).
Bear Stearns should have been allowed to collapse. The short-term economic pain would have been far less than the long-term economic pain we will now be enduring because we've decided to take the Soviet approach to bailing out failing companies.
You simply have no idea what you’re talking about. Had BS been allowed to collapse, there would have been a massive and hysteric “run on the banks” (and all other investment houses) that could have easily thrown the world into a depression. The “Fed” is in place to make sure these things don’t happen. BS has failed...shareholders have lost money....management has been fired.....but the good news is that the “economic wheels” of the Country and World are still on the bus.
Who has a loan guarantee?
we've decided to take the Soviet approach to bailing out failing companies.
Let me know when the Bear Stearns employees start cashing pay checks from the government.
So what should we do then? Reward every single private entity that makes bad investment choices with a bailout? What about the rest of us who made more responsible investment choices? Why are we on the hook for those who did not do that?
How was Bear Stearns rewarded? Or Countrywide? Or New Century Finance?
Why are we on the hook for those who did not do that?
How are you on the hook?
How were they rewarded? Bear Stearns as a company will soon be gone, the shareholders got pennies on the dollar for their stock, and many of the employees will lose their jobs. That is not a reward. That’s a company that made bad decisions ceasing to exist.
Bear Stearns was not bailed out; the financial system was.
So basically our economic policy should be "let's practice capitalism, until someone screws up, and then we get the government involved." All this sort of thing does is create more reasons for the government to bail out other bad investors. We already have talk of bailing out the banks that chose to lend money to people they knew would not pay it back. Why stop there? Let's just have a command economy and be done with it.
FTFA: Both then turned to the Fed to arrange a $30 billion dollar loan guarantee against Bear's assets to prevent the firm from going bankrupt.
Bear Stearns and the other firms involved were rewarded by being able to get loan guarantees that ordinary people could not get had they made the same bad financial decisions.
How are you on the hook?
Who pays the taxes that will be used to cover these loans should they fail to be repaid?
It’s a semantic quibble. They bailed out the bond-holders, not the shareholders.
“Any government loan guarantee is a bailout.”
Not necessarily. JP Morgan has to pay back the loan from the gov’t, don’t they? I did not read that they were off the hook in re-paying this loan. It sounds similar to when the gov’t gave loan guarantees to Chrysler (20 yrs ago maybe) - Chrysler paid it back and successfully moved forward.
I agree with the Fed’s response- a “run” on the investment banks would have been much worse.
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