YABT: What would happen if we never had/administered/though up a bailout plan for the banks?

[polarmystery]

For the record, I am neither for nor against a bailout plan, just curious as to the possible successes/reprocutions of the bailout ideas (the one that just past and the ones being thought up as we speak). Any thoughts? What say you?

 

[Budmantom]

We would all be dead.

 

[StageLeft]

Nobody knows. Safe to say that short term we'd have been in worse shape. Long term is anybody's guess.

 

[Jaskalas]

A proper reckoning of failed assets with a slower and healthier recovery. All we?re doing now is creating a new bubble. Pray that this bigger bubble doesn?t burst, for there is no one to bail out the United States Government.

 

[Genx87]

Well liquidity was drying up so I guess a complete lockup of the credit markets? Result would be many business's failing to get bridge loans to pay employee's or pay vendors. You can see how it can spiral out of control. We learned from the Great Depression what happens when there is a lack of credit to grease the wheels of industry.

 

[polarmystery]

Originally posted by: Jaskalas
A proper reckoning of failed assets and a slower and healthier recovery. All we?re doing now is creating a new bubble. Pray that this bigger bubble doesn?t burst, for there is no one to bail out the United States Government.

Given your situation were to happen, and the bigger bubble does in fact burst, what happens to the U.S. Gov from a financial standpoint?

 

[Lemon law]

All the trillions of dollars in saving, 401-ks, and investments would simply vanish as the bankers ran for the hills. The collapse of the US economy and government would be over before the noon news.

 

[fskimospy]

It would appear that the bailouts through the banks have had at least some of the desired effect.

Text

While that doesn't mean anything even close to the problems being over, it would appear that credit markets would be manifestly worse than they are right now otherwise. One of the generally accepted causes of the Great Depression was a total system wide failure of credit markets, and there are at least encouraging signs that this has been avoided. So... had we not done this I guess there's a decent chance the credit markets would still be in the shitter, and that would have been very bad. (well, even worse than it is now)

 

[JS80]

Originally posted by: polarmystery
For the record, I am neither for nor against a bailout plan, just curious as to the possible successes/reprocutions of the bailout ideas (the one that just past and the ones being thought up as we speak). Any thoughts? What say you?

Almost every single bank would have "failed" and the entire banking system would have been nationalized.

 

[Insomniator]

Probably nothing. We'd still be hearing about the world ending if we don't do it soon however.

 

[2Xtreme21]

Considering no one knows what happened to $300 billion of it and people speculate it went toward buying out other banks and making fat, rich people even richer, I can say that nothing would have happened.

 

[LegendKiller]

Originally posted by: JS80

Originally posted by: polarmystery
For the record, I am neither for nor against a bailout plan, just curious as to the possible successes/reprocutions of the bailout ideas (the one that just past and the ones being thought up as we speak). Any thoughts? What say you?

Almost every single bank would have "failed" and the entire banking system would have been nationalized.

This. But before nationalization could take place and start lending, hundreds of thousands of jobs would be lost in a matter of days as businesses could even get a dime of credit.

 

[Kanalua]

Originally posted by: Jaskalas
A proper reckoning of failed assets with a slower and healthier recovery. All we?re doing now is creating a new bubble. Pray that this bigger bubble doesn?t burst, for there is no one to bail out the United States Government.

QFT

 

[nageov3t]

banks wouldn't be lending and companies would be cutting jobs/expenses because they're worried about future sources of capital... oh wait.

 

[jagec]

Quicker slide to the bottom, followed by a faster economic recovery, a smaller gap between the rich and the poor, and not nearly as much long-term debt to rear its head up and steal our retirement and our childrens' future.

Obviously I am NOT a fan of the bailouts, or at least, not in the way that they ended up being structured. They did almost nothing to improve bank lending.

 

[Jiggz]

We would have to be dealing with different banks instead of BoA, Citi, WaMu, etc. In short, those banks who received TARP money would have closed shops and those right behind them would be dealing with us now! And finally, there would have been lesser number of banks today!

 

[GTKeeper]

Great Depression II, but worse, a global depression.

People without imagination, i.e. ones that pose their hypothesis on reality and not on 'what would actually happen' don't realize that the bailout bailed us out temporarily.

Anti-bailout people can sit here all day and say 'See the TARP didn't work, bla bla bla bla bla' but until I have the ability to go back in time and stop the bailout so you can experience the financial wrath yourself, you will never believe that it was necessary.

Some people don't understand the financial system and capital markets, and thats ok, but what pisses me off is when they try to be experts on TARP, when obviously they are not.

 

[Xavier434]

No one knows, but what I do know is that it is did help some banks start lending again. It is part of the reason why I am able to get a loan for a house right now.

 

[wwswimming]

my limited understanding of Thursday Sept. 18/ Friday Sept. 19 (rumors of the bail-out came
out on that Thursday. the bail-out was announced on Friday) was that the sell orders were in
place Thursday morning so that the Dow would have fallen about 20%. massive, widespread
sell orders.

somehow, by market closing Sept. 18 the markets had recovered some of their losses.

another consideration is the mechanism by which the US government borrows money.
if them have an un-attended auction, as Germany has experienced recently, it would put
us into un-charted territory.

i think the financial services industry in general is following a game plan of "loot while the
looting is good (good as in possible)". and the government is following a game plan of
looking the other way.

in other words, i don't know what would have happened.

but the good news is - you can still buy a quad core and a decent motherboard for under $400 !!!

 

[brandonbull]

Originally posted by: loki8481
banks wouldn't be lending and companies would be cutting jobs/expenses because they're worried about future sources of capital... oh wait.

You're right. I'm glad the gave our billions of dollars to banks so we could have avoided massive layoffs and banks refusing to lend.

Just more of those crooks on Wall Street crying wolf. It would have be a disaster for the economy if they had to tighten their belts and be forced to pay for their greed.

 

[kylebisme]

I'd have much rather we bailed out our citizens, giving the money for them to pay back their debt to the banks instead of bailing out the failing banks to continue holding that debt over them.

 

[brandonbull]

Originally posted by: TheSnowman
I'd have much rather we bailed out our citizens, giving the money for them to pay back their debt to the banks instead of bailing out the failing banks to continue holding that debt over them.

We can't have millions of people running around freed from indentured servitude. What would the elites do without someone to slave away for them?

 

[JS80]

Originally posted by: TheSnowman
I'd have much rather we bailed out our citizens, giving the money for them to pay back their debt to the banks instead of bailing out the failing banks to continue holding that debt over them.

If they didn't preserve the banking system (i.e. "bailout" the banks), then the balances the citizens own would have evaporated, and the companies that employ the citizens balances would have been evaporated. The money would have just disappeared.

 

[BoberFett]

Originally posted by: JS80

Originally posted by: TheSnowman
I'd have much rather we bailed out our citizens, giving the money for them to pay back their debt to the banks instead of bailing out the failing banks to continue holding that debt over them.

If they didn't preserve the banking system (i.e. "bailout" the banks), then the balances the citizens own would have evaporated, and the companies that employ the citizens balances would have been evaporated. The money would have just disappeared.

So let the balances disappear. I'd rather have the government handle FDIC insurance than hand hundreds of billions to the greedy bastards that just fucked us over.

You do realize, I hope, that we're still getting fucked, and will continue to get fucked, until the new bubble (the bailout bubble) bursts at which point we're back to square one.

 

[heyheybooboo]

Topic: What would happen if we never had/administered/though up a bailout plan for the banks?

Instead of being functionally insolvent (or functioning insolvently as they well may be doing today) the giant sucking sound heard would be the world going down the toilet, fast.

I would suggest closely watching the Maiden Lane LLCs



edit: Here is the Fed H.4.1 from January 22nd. Travel around 1/3 of the way down the page. There are now 3 Maiden Lanes holding around $74bil in 'toxic assests' and it looks thus far that we (or technically the Federal Reserve Bank of New York) are owed around $7.5bil in principle and interest (which I assume is kind of a joke because the 'assets' are worth - anybody want to guess ??? - maybe 30 cents on a dollar, today).

Maybe we'll get lucky and double or triple that in the future (if these yahoos know what they are doing).