James Galbraith - Economist - Bailing out Banks

[jackace]

Can someone please explain to me why the FDIC should not do as this economist is saying?

Video

I'm not a huge financial person, but this makes so much more sense than bailing out the idiots/thieves who got us into this mess.

 

[BoberFett]

I'm gonna take the cynical route and say because no wealthy, politically connected individuals would stand to profit from that course of action.

 

[jackace]

Originally posted by: BoberFett
I'm gonna take the cynical route and say because no wealthy, politically connected individuals would stand to profit from that course of action.

Honestly that's the only reason I could think of myself.

 

[Craig234]

He lays it out that either the small banks or the few big banks are going to get thruogh this.

I pick the small banks. Seems nuts we're not doing that.

 

[Fern]

Originally posted by: jackace
Can someone please explain to me why the FDIC should not do as this economist is saying?
-snip-

Our prisons are already overcrowded?

Many of us here have been wondering the same thing, the process he speaks of has long been in place and often used.

I don't know why the Obama admin won't use it?

I'm not sure FDIC receivership is the same thing as 'failure', I'm guessing it is but don't know for sure. If the FDIC took over banks lot of people/business would lose money (I suppose any in excess of FDIC insurance). Most of TARP money received by AIG and went right back out again to other banks etc. I don't think they would have received anything under an FDIC takeover. This would be the 'ripple' effect we hear so much about.

Would would've damaged by the ripple effect and why was it to be avoided without question? I'm going with BobberFett's answer for now.

Sometimes I almost think we have two new paradigms for the 21st century:

1. Public risk, private reward, and

2. If rich powerful people lose money so do you, If rich powerful people make money, well they make money (not you).

Fern

 

[JS80]

political suicide for Obama. If they nationalize it will get used against him in 2012 he'll be labeled as a socialist and point to bank nationalization. SEE LOOK HE'S A COMMIE BASTARD. Obama is avoiding nationalization at all costs at the expense of the country's financial security.

 

[Fern]

Originally posted by: JS80
political suicide for Obama. If they nationalize it will get used against him in 2012 he'll be labeled as a socialist and point to bank nationalization. SEE LOOK HE'S A COMMIE BASTARD. Obama is avoiding nationalization at all costs at the expense of the country's financial security.

I'm tempted to say 'good point', but the FDIC cleans them up and puts 'em back on the market.

I may wee be wrong, but I would expect them cleaned up, and 'un-nationalized, well before 2012.

Fern

 

[JS80]

Originally posted by: Fern

Originally posted by: JS80
political suicide for Obama. If they nationalize it will get used against him in 2012 he'll be labeled as a socialist and point to bank nationalization. SEE LOOK HE'S A COMMIE BASTARD. Obama is avoiding nationalization at all costs at the expense of the country's financial security.

I'm tempted to say 'good point', but the FDIC cleans them up and puts 'em back on the market.

I may wee be wrong, but I would expect them cleaned up, and 'un-nationalized, well before 2012.

Fern

regardless the damage would be done, and if it didn't get "un-nationalized" by 2012 he'd be toast. i don't think he's willing to take that risk. But this recent exercise shows how much of a sell out Obama is...the new plan is effectively heads hedge funds win, tails taxpayers lose.

 

[Craig234]

Originally posted by: Fern

1. Public risk, private reward, and

2. If rich powerful people lose money so do you, If rich powerful people make money, well they make money (not you).

Fern

Welcome to the liberal side. You might want to watch the movie 'The Corporation' for some more on 'externalizing costs', i.e., making taxpayers pay for business impact like pollution.

 

[alchemize]

I posted this in the Krugman thread:

Geithner's Galling (and Dangerous) Plan For Bad Bank Assets

Geithner's Five Big Misconceptions