Question for the Board: If the Banks Were Not Bailed Out...

Would all of these state governments be going broke now?
If the states were given that money instead, would it make a difference now?
It's not a rhetorical question. I'd really like to know the answer
to that question. With all of the sharp minds here on ATS, I figured
someone might know the answer...

It's a complex issue. Most likely the governments would be in the same position anyway.
The governments instead would have had to bail out businesses and mortgage holders as the banks tried to foreclose on the debts. The governments, state and federal would also be paying some support for all those that lost their jobs employed either by the banks themselves or by the businesses who had outstanding bank loans.
In the end it was cheaper and easier to bail out the banks.

reply to post by orbitbaby


Answering this question requires a deeper understanding of each state's perdicament than I currently have. I do not believe that states are broke, for various reasons, but just for the sake of answering your questions I'll say yes. Here are some related questions:

Aren't states too big to fail?

Couldn't the exact same arguments about why the banks deserved bailouts be used to argue why states deserve them?

I'm no expert on this matter and as others have stated it is a complex issue. I'm sure some of the ATS "best and brightest" can shed some light. I'd only caution that political bias might likely influence opinion as to whether TARP was a success or failure. Personally I'd gander that had the government not bailed out the banks those loses and "toxic assets" would have eventually found their way onto the local, state and federal balance sheets directly or indirectly anyway.

Just to add a resource for those interested in where the money went and how it was spent.

www.recovery.gov...

Lets face it something is going on, that we have no idea about...It has to be...they can't be that stupid...If you ask me something really bad is coming and all this is to keep us busy...I mean think about it where did the trillions come from....It's just a number not money....Money has value because they say it does,not because it does.

Wallstreet/Congress made the Federal Reserve Banks insolvent.

If they weren't bailed out the States would have no debt. A collapsed Federal Currency would have resulted in States going sovereign and having to decide all over again if they wanted a Federal Government.

We would have broken off into several new countries. The workers and money would have fled Socialist utopia for the Free Republics.

As we saw with the fleeing of California for Texas...even the gays left San Francisco for Texas. There's opportunity there.

If the banks and huge corps were not bailed out ( simplified so that more may understand):-

1. Bank runs will occur. Banks will collapse. Billions of depositors will have lost their money, including pensioners whom had trusted fund agencies to play the casino in wall streets around the world. Corporations would have run of funding for their expansion, and close down, liquidated.

Worse with derivatives, as the ownership of bank collaterals are no longer with the banks, but sold to million others in bits and pieces on the trading floor. Liquidating and collecting back debts would be a nightmare, if not impossible.

BUT, the fault is not on those who loan, only those who loaned out the funds. It is their fault for lending out depositors money without ensuring that they could pay back the capital in the event collapse came. Risk management is on the shoulders of banks.

They screwed up, thus they should pay the price, including depositors, for they knew well enough the risks they take when investing. They had the choice - to invest or not to, unlike taxpayers today whom have no choice but to socialise debts made by the private sector which privatises its profits.


2. Those depositors who managed to get back their assets in liquid form will hoard it, and await for a total collapse before spending their money again. This includes the banks and corporations whom declared insolvency, as they would have set aside money for their ownselves. Protection of themselves always come first.


3. Those who lost money or jobs, will have to look for jobs in order to survive, no sense in crying over spilt milk. And that's where the gov comes in - to provide jobs in infrastructure, seeking out lucrative and better niche industries to develope and fund, cheaper resources to feed the hungry masses with bailout funds, as a temporary measure.

Once the economy stabalises, with money circulating, hoarders will source out the more lucrative industries and start to provide their hoarded capital, taking over from the gov and circulating even more money which improves the economy substantially.


Unfortunately, the gov and most gov chosed to prop up banks and corps, resulting in hoarded money to the tune of trillions, with none left for the masses to circulate, and even cutting more social funding, and thus, the uprisings you see all over the world.

All these are moot anyway, as what has happened, already happened. The only way out is still what should have been allowed to happened in the first place naturally, as it will eventually. It is inevitable, only that it will be the elites whom will remain unscarred with leveraging on the opportunity of delay in the inevitable. The masses had been doomed. Push and shove will become inevitable too. There is no escape.

Yes. The Dow would be near 4,500 by now or less. 50 Million out of work more on top of current levels, Financial Choas, possible martial law, mob rule would be starting and the worst today is the best then.

Why is it that we often stress ourselves overly with fears of chaos, anarchies, mob rule, etc, etc, so much that we would trade our own freedoms, selling it away for a mere few days of security?

Opression and chaos cannot last in civilisations. Like water, each society will find its level.

After disasters, natural or man-made, chaos will often result. In unorganised societies, or dictatorships, very often the chaos will be prolonged, for the governorship of a people is in disarry, there is no chain of command, no one at the helm, for the rulers had trusted no one, and no one is in charge. Every 2 bit leader with a gun will attempt to seize the throne resulting in only more disorder and mayhem.

But in organised societies such as democracies, when one ruler falls, another quickly steps in to fill the vacuum.

Should the banks and corporations collapses in USA, chaos and anarchies will not happen for long. Those in power responsible will be suspended from their duties, and other legislators put in charge to investigate, while at the same time to pacify the nation, ensure the citizens are protected and fed in the meantime as they look for solutions using the best and the brightest the nation can offer, which has no lack.

Should they fail, or unable to come up with a solution in the short term, and the masses angry, soldiers will be task to maintain order, and in a democracy, the bullets are not to be used, but handcuffs on looters or just plain trouble making opportunists who brings harm to others with physical weapons. Others are free to speak out their anger or offer solutions so long as they harm no one else.

There are systems in place with organised societies such as USA. Thus citizens should not and need not put up with fear mongering of cities going up in smoke, unless democracy is nothing but an illusion and tyranny in the form of military might is wrought upon the masses. Then there will be hell to pay as american citizens are equally armed, with soldiers their own families, and those in power only a minority.

Originally posted by orbitbaby
Would all of these state governments be going broke now?
If the states were given that money instead, would it make a difference now?
It's not a rhetorical question. I'd really like to know the answer
to that question. With all of the sharp minds here on ATS, I figured
someone might know the answer...

No we should have nationalized these banks.

reply to post by saabacura


It would be suicide for a society to nationalise failed assets, because it will mean taxpayers will be made to pay off depositors, investors and debts, as the bailouts had done except in name.

US is a capitalist nation of free enterprise. Owners set up banks, built their reputations with a few gov regulations to protect depositors and the gov takes a relative hands off approach to commerce.

The banks and corporations had failed investors and depositors, while they amassed huge hoarded up profits annually. Banks and CEOs never loses whichever way the market goes. Losers were often others. And they made huge losses with depositors money. The money is gone to other players in the market, even into these biz leaders wallets.

By taking over banks as in nationalisation, the gov, representatives of the people, are thus responsible for the deposits, loans and everything the banks had done wrong. Where will the money come from? It wont be dropping from the skies, but only through taxpayers funds and economic resources which could be better spent stimulating the economy.

Even if the gov/taxpayers were to pay off all debts, it can only do so with only a percentage on the dollar, and not the full dollar considering the huge amount of depositors and investors. It will satisfy no one in the end, only creating more enemies and discontent between the money class and society.

Better let those responsible be burnt at the stake for their own mistakes - biz owners and investors, while the rest of society pick up the pieces of sharing what they have with each other towards a more responsible future.

Two problems, fractional reserve banking, and greed. Under our current system, there is not much for accountability. If you can borrow out 1 million for 100,000, once you acheive 100,001 dollars, plus be able to confiscate whatever collateral was offered up in the first place, that is a succesful bet. It really pays to show the loss though. Show loss when its all profit? Other peoples money? The chicanery is amazing most times.

Every local and state and federal entity publish a thing called comprehensive annual financial reports. They detail profit, expenditures, and loss. It pays to show expenses and loss, not so much with profit. Most would be shocked to learn that their city is a money making machine. Only because everyone is conveniently told that we are broke.

Politicians at the state level push this lie and place it on the city, a very crafty game after you consider who's involved.

Taxes are rather kind of moot, because if a non government organization fails to pay, all their assets are up for grabs. Thats the way they like it.

My point is that I truly believe that there is no way we as a country are anywhere near broke. Banks, lying all they want, will never presume to make a profit. Same with the gov. Simply because it really isn't in their best interest.