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FNfreak
August 24, 2010, 06:33
Hindsight being 20/20....a great number of us suggested at the begining of this economic crisis in the Fall of 2008 that instead of bailing out banks directly, give the bailout monies to each Taxpaying household. Or, to each individual taxpayer. Some claims that the bailouts have "cost" each taxpayer 20K or so...

Let's be conservative in our estimate and say $10k per taxpayer. If Uncle Sam gave each Taxpayer $10K in late 2008 what would the economy be like NOW?

I know I would have paid ALL credit card debt off, paid forward my mortgage and made several significant purchases including a new(er) car. I would have "stimulated" my local economy, my State economy, and Several of the TBTF banks with repayments of Debt. I know others here and across the country would have done the same.

The average (or below average "JOE") would have blown the cash, BUT that would have been stimulative as well!!

So, we the people would have been bailed out, which in turn would have bailed out banks, governments, industry and retailers...That bailout money would have traveled 100% THROUGH the entire system and benefited EVERYONE!

As it stands, banks and unions (GM) got the money, they stuffed their collective pockets and paid bonuses with the money,then flood Washington with new campaign money....We got nothing but increased interest rates on debt, loss of value in our retirement accounts and loss of jobs in our local and state economy.

Am I missing something here by thinking along these lines??

nwobhm
August 24, 2010, 07:30
Since it looks as though .gov is inevitably going to control everything I was for letting all the banks go bankrupt and then .gov could have bought them out of bankruptcy for pennies on the $. Substantially cheaper alternative.

Bama Steve
August 24, 2010, 08:31
I originally thought that bailing out the consumer was a better choice but after further consideration decided that no bail out to anyone was the answer.

Bail out = debt X debt.

Everything insolvent should have gone into bankruptcy.

We would be seeing the light at the end of the tunnel by now rather than staring into the darkness of an abyss . . .

(Thank-you "Social Engineering").

:wink:

gates
August 24, 2010, 09:37
no it would not have worked - people were driving gdp based on credit that is no longer available and no longer sought.

FNfreak
August 24, 2010, 15:31
If the money went to common man, it would have worked it's way UP through the system...starting local then going regional to national...Not many average "Joes" have/had trading accounts with Goldman, JP, Chase, et. al....so maybe the TBTF would have ACTUALLY FAILED!!! would the "stimulative" benefits served a greater number of people than a select few banks/bankers?

I'm just playing the devils advocate so feel free to chime in. I understand dumping a large volume of dollars into the economy can start hyper-inflation, but that is ONLY when those dollars are in competition for necessary goods and/or services.

Repaying the credit driven DEBIT of GDP with hard cash would have had some restorative effect would it not? Gov't Gives GATES $10k to spend as needed. GATES Gives GM $8000 to pay off car loan (GM gets $8k early payoff...what's wrong with this, GATES has $200 extra dollars a month FREE to spend on what he WANTS instead of a car payment??) GATES gives $1000 to CHASE MANHATTAN to pay OFF credit card debt....(Chase has one LESS account in DEFAULT...what's wrong with THAT?? GATES has $150 extra a month to spend on Scott Trade accounts!) GATES takes MRS. GATES to a $500 deluxe steak dinner to celebrate being debt free...local waitress gets BIG TIP (she pays off her dentist billearly), steak house owner sells big ticket wine bottle, pockets $200 pure profit (takes his wife to Steak and Shake to celebrate, tips waitress extra $5)...what's wrong with that???) GATES sends AIM surplus $100 for .308 ammo for FAL...(Aims takes $$ and buys more ammo at cheaper prices from bankrupt Greece and offers FAL File(ers) .308 at .25cents a round....what's wrong with that....???...talk about the VELOCITY of money...

ALL the money UNCLE SAM dumps into the pockets of US TAXPAYERS winds up back in the system and works it way UP....benefiting 100's if not 1000's of LITTLE people along the way.

In contrast, US Gov't gives JP MORGAN/CHASE $300 BILLION bailout...who gets the benefit???? JP Morgan/CHASE executives buy bigger vaction homes in the Hamptons....no new money is loaned. Credit Card rates acrossthe board hit the maximum allowed by law, regardless of your "credit score"....Talk about a monetary DEAD END...only a few RICH folks benefit from money that they they already had too much of to start with.

I agree it wouldn't have prevented what's coming, but wouldn't the money have actually HELPED THE MAXIMUM AMOUNT OF PEOPLE???The money PER CAPITIA that it would freed up for spending back into the economy would have been geometric in proportions

gates
August 24, 2010, 16:34
I would rather have seen the money go to mainstreet instead of wallstreet but your question was "would this have worked?" the implication in the question, as I read it, was, would this have worked instead of the failed policy of giving that money to the banks - the answer is no - yes, it would have given a 6 or 8 or 12 month boost to the economy but what happens after mainstreet spends the money - they look for more! and there isnt any - its not there for the banks and it would not have been there for the guy on the street - this is just MY opinion - I could be wrong.

Edit: we had a false economy based on credit and bubbles not increasing wages- what we are experiencing right now is a deflationary credit collapse/contraction - just like the 1930's - stim., under the keynesian model, TEMPORARILY replaces consumer spending and is withdrawn as the consumer recovers - in NORMAL recessions - this aint a recession and it aint normal...

FNfreak
August 24, 2010, 17:04
Gates,
I agree this wouldn't have totally prevented what's coming. Would have softened the landing some for the common man. I guess I should have said, would this have been a BETTER use of OUR money since they were so HELL BENT on giving it away?

gates
August 24, 2010, 18:03
My opinion - yes, it would have been better spent on the people as the banks are not lending - the whole reason for "saving them" in the first place.

Eric Bryant
August 24, 2010, 20:03
Long-term, not much would have been fixed by putting the money into the pockets of consumers instead of into the banks - but at least we'd see a much better distribution of wealth, which would likely increase the likelihood of a recovery. Bankers can't buy enough Mercedes and Rolexes to keep us plebs gainfully employed.