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WHy the bailout???
Posted on 9/19/08 at 5:17 pm
Posted on 9/19/08 at 5:17 pm
IN layman terms, can someone explain why the govt should bailout these companies?
2
Posted on 9/19/08 at 5:51 pm to 33LSU33
The banks are 'too big to fail,' because if they did, it would cause a cascade effect that would wreck every corner of the economy.
Why are they bailing out AIG and the MMA's? I have no idea.
Why are they bailing out AIG and the MMA's? I have no idea.
Posted on 9/19/08 at 6:17 pm to Parliament
AIG: Because it's an insurer and would also have a cascade effect.
MMA's: Because if these fail then there will be an extreme panic and everyone will try to take out their money.
MMA's: Because if these fail then there will be an extreme panic and everyone will try to take out their money.
Posted on 9/19/08 at 10:22 pm to 33LSU33
If people loose confindence in mma, there will be a huge run on them. Financing would dry up. Investment in the economy would dry up.
If this happens your best bet is to stock up on propane, canned goods and bullets.
This is why the gubment is bailing them out.
If this happens your best bet is to stock up on propane, canned goods and bullets.
This is why the gubment is bailing them out.
Posted on 9/19/08 at 11:12 pm to Cash
Does this skew the Risk/Reward tenet of the Free Market and capitalism in general? If the poorly managed companies get bailed out, that seems like a complete violation of the "Corporate Darwinism" that is essential to the success of the free market.
Posted on 9/19/08 at 11:31 pm to coloradoBengal
quote:
Does this skew the Risk/Reward tenet of the Free Market and capitalism in general? If the poorly managed companies get bailed out, that seems like a complete violation of the "Corporate Darwinism" that is essential to the success of the free market.
Absolutely. This is a big concern. Screw up and if you are big enough the government will bail you out.
Posted on 9/19/08 at 11:58 pm to Cash
The problem here is that the government screwed up the economy by meddling in the free market. They force mortgage companies/banks to loan money to people that were not qualified to get home loans. All this on the premise that every American should have the opportunity to own a home. Despite their ability to repay the damn loan.
The government broke it, they need to fix it. Of course they had no choice. To not intervene and risk an economic collapse is unthinkable.
Obama is the only one hoping for a collapse as it is his ticket to the White House.
The government broke it, they need to fix it. Of course they had no choice. To not intervene and risk an economic collapse is unthinkable.
Obama is the only one hoping for a collapse as it is his ticket to the White House.
Posted on 9/20/08 at 1:16 am to Cash
quote:
If people loose confindence in mma, there will be a huge run on them
I realize that Chuck is FDA approved, but is Chuck FDIC backed?
Posted on 9/20/08 at 2:07 am to coloradoBengal
quote:
Does this skew the Risk/Reward tenet of the Free Market and capitalism in general? If the poorly managed companies get bailed out, that seems like a complete violation of the "Corporate Darwinism" that is essential to the success of the free market.
Apparently that isn't true. Without these bailouts - the free market would completely fail. Unless you consider economic oblivion to be "success".
But don't worry about the risk/reward tenet being lost on shareholders. The shareholders of all these bailed out companies are virtually getting zeroed out. The difference between a bailout and no bailout for shareholders is the difference between losing 99.9% of their share's value and 100%.
As proof of this - would you like to buy 34 shares of Fannie Mae for $20?
This post was edited on 9/20/08 at 2:09 am
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