To bailout the big guys or not?

[Karl.in.eu]

The recent economic events that occurred in USA and spread over the Atlantic, are a big head ache for the brightest minds of our times. The world is witnessing hard times on financial markets all over the world, and governments seem to have a cure for all this mess.

As many of you know the USA congress approved the 700 Billion dollar bailout plan in a very short time to save and chill the tensions on the local markets, and saying that this was a necessary measure to help the economy.

In Europe, the ECB and representatives of other institutions will have a meeting on Thursday concerning the danger of a similar situation to develop in Europe. But, from the start no one is willing or is agree to pass a bailout plan as USA did.

So the question is what is good and what is wrong to do in such a situation. Shall we help the big guys and clean the markets from all of their mistakes or, shall we let them burn this time and learn an expensive lesson?

My point is that not all the big/small institutions that are facing problems should receive this help, as tax-payers money is not for saving someone else’s business.

[independent]

So the question is what is good and what is wrong to do in such a situation. Shall we help the big guys and clean the markets from all of their mistakes or, shall we let them burn this time and learn an expensive lesson?

Bailout in US was necessary - but the way it is done is not effective. Government buying overpriced bad
mortgages is not a solution - it is robbery of ordinary tax payers.
Unfortunately EU must now do its own bailout - if not, the bill of US stupidity will be paid here. Now it is
elementary in every country outside US to back theirs economy (whatever it costs) - so that the US can't
"export" its failure. There are many poor countries unable to do that kind of bailouts - and they are going to
pay the highest price. The only hope is that US today is so poor, that it can't pay itself out of its own mess.

[Yalta1945]

“Government -- in the United States and also in Europe and Asia -- is failing. National and regional governments are still approaching the crisis with the aim of protecting their own interests rather than taking a global approach.”
This is exactly what I thought. Generally, the EU often fails due to different interests of its member states.

[Yalta1945]

Government buying overpriced bad mortgages...

... at the lowest price, and selling at the higher price when markets recover.

The only hope is that US today is so poor...

:haha poor US :lol: They cannot any longer afford buying paper and colour to print more dollars. :haha

...that it can't pay itself out of its own mess.

The worse the better - very interesting outlook. 8-)
Of course, bringing down oil prices swiftly to 80$ per barrel when some oracles were talking of 200$, and € to almost 1.30 after the second attempt at above 1.60, and knocking down Russian markets after naive investors got hooked there, - it was all needed to be done.

[independent]

Government buying overpriced bad mortgages...

... at the lowest price, and selling at the higher price when markets recover.

When I made that comment "Bailout plan" was to bye bad mortgages - now they have already understand
that it is a stupid thing to do. Now the plan has changed - and government are going to invest directly to
banks.
You see - if government buy bad mortgages with fair price - it can't made any change in banks balance.
So this new method (copied from what Sweden made 1990's) is MUCH better way.

Btw. Finland and Sweden had similar crisis 1990's - swedish government invested directly to banks - and
Finland selected to bye bad mortgages (as was original "Bailout plan") - Sweden did recover rapidly - Finland
felt to deep regression ( and used many times more money for "bailout")...

If US had kept the original solution - it could have cost many times more than 700 billions
to be effective ( some estimates as much as 5 trillion could have been needed)...

The only hope is that US today is so poor...

:haha poor US :lol: They cannot any longer afford buying paper and colour to print more dollars. :haha

Even You must know better than that...
US is not a rich country - solely their foreign debt (11 trillion) is more than their companies combined
value (stock markets companies < 10trillion ) - and national debt is many times more. So if they had
ended to raise debt with some more trillions - it could have messed up whole global finance system.

]...that it can't pay itself out of its own mess.

The worse the better - very interesting outlook. 8-)
Of course, bringing down oil prices swiftly to 80$ per barrel when some oracles were talking of 200$, and € to almost 1.30 after the second attempt at above 1.60, and knocking down Russian markets after naive investors got hooked there, - it was all needed to be done.

It is not about Russia - they can easily make it. It is about all poor countries who has done as "western
democracies and IMF" has told them to do - opened their markets and allowed foreign companies freely
operate. They are the ones to suffer (including Baltic Countries). So don't be afraid big investors loosing
their money- no way - ordinary people are the ones who will loose theirs. For investors this is the best
possibility for decades to earn more. Unfortunately it means also that during next 10 years or so, there
will be e.g much more famine and suffering.

[Yalta1945]

US is not a rich country - solely their foreign debt (11 trillion) is more than their companies combined value (stock markets companies < 10trillion ) - and national debt is many times more. So if they had ended to raise debt with some more trillions - it could have messed up whole global finance system.

It is not so simple. Money is not as material as any object in the universe to follow the laws of physics. Many our ideas about debts, accounts, balances, etc. are quite ephemeral to the nature of money. They exist for our convenience in the convenient times. That's all I can add for a while.

Unfortunately it means also that during next 10 years or so, there will be e.g much more famine and suffering.

Possible famine and suffering in such places as North Korea and Zimbabwe will have nothing to do with this crisis. We are also not going to starve. It's more likely in the places where a lot of people depend totally on somebody else to produce food, without growing a single potato by themselves.

[independent]

US is not a rich country - solely their foreign debt (11 trillion) is more than their companies combined value (stock markets companies < 10trillion ) - and national debt is many times more. So if they had ended to raise debt with some more trillions - it could have messed up whole global finance system.

It is not so simple. Money is not as material as any object in the universe to follow the laws of physics. Many our ideas about debts, accounts, balances, etc. are quite ephemeral to the nature of money. They exist for our convenience in the convenient times. That's all I can add for a while.

Money don't follow rules of physics - but it follows the human nature... greed can explain all
what happens in global business..

Possible famine and suffering in such places as North Korea and Zimbabwe will have nothing to do with this crisis.

Indeed it have a lot of to do with everything... To be more precise - what leads us to this crisis had
influenced all countries in the globe. And when rich countries are focusing to rescue only their own
economies it will make poor countries to be the losers. To deny it, one must be an absolutely idealist
without any sense of reality.

We are also not going to starve. It's more likely in the places where a lot of people depend totally on somebody else to produce food, without growing a single potato by themselves.

I would love to hear You repeating that opinion let's say 2010.... You see - Baltic Countries don't have
experience of real regressions until now (soon). After few years they will be more realistic on their opinions.

[M.Helen]

Actually, small and poor countries that wouldn't be able to afford a bailout for their companies are not even affected by the crisis. That is because their system is not yet integrated in the world economy and thereby a lot of cash is used and very rare checks and credit/debit cards.