NationStates Jolt Archive

I remember that a few letters to the editor of my town's newspaper suggested that the bailouts under the Bush, now Obama, administrations might not be the most effective move in shoring up our economy. I apologize, but I do not remember the authors, nor the dates that they were published. At any rate, these letters argued that those corporations that need help, instead of bailing them out, should go through court ordered restructuring plans. What does NSG think about this?

I, personally, am of the belief that if it is "too big to fail" that it is just too big!! Break up the companies, perhaps through the anti-trust legislation. Also, if neither the private sector, nor the Federal government is able to fix it...Socialist Devolution, in other words, put the industry under government control and put the states in charge of it. Again, one may put their two cents in on this as well, but I would like to hear what peoples' thoughts are on the first query first.

Both is needed for the US. Period.

Are you saying both the writers' and my ideas are needed. If so, I am prone to agree, Dimesa. However, for sake of furthering discussion, why? If you feel the bailouts are necessary, to what extent?

Neither.

The banking system should be nationalized. The shareholders (pref and common) zeroed, the bond-holders crammed down to the extent needed. Insurance companies that hold these bonds get bailed as needed. Everyone else - hedge funds, bond funds, pensions funds - take it up the ass. (That will teach you to have your pants around your ankles).

The CDS exposure where problematic gets handled on a case by case basis.

Once this has happened the bad assets can be stripped out to an RTC vehicle.

The above solution would cause a fair bit of short term pain, but it would restart the credit markets and remove all the problems caused by the current climate of counter party risk.

It won't happen of course. It makes far to much sense.

Are you saying both the writers' and my ideas are needed. If so, I am prone to agree, Dimesa. However, for sake of furthering discussion, why? If you feel the bailouts are necessary, to what extent?

What I mean is that both "bailouts" and restructuring are needed, you can't have one without the other, at this point, not if you're looking for the best foreseeable option right now.

"Bailouts" meaning short term economic stimulation, restructuring meaning long term reform of certain things.

Yeah, America, my homeland, is too enamored with its erroneous free market world view that nothing will change it.

As for Dimesa, I am thinking long term, for this problem will last awhile as I am reasonably sure we are in an economic depression. Sure, it is too soon to say that, but I have this sneaking feeling that something major must be done. A bailout is a mere bandaid when we need to perform a triple bypass on our economy, imho.

It's homeyland now, bro.

So what does everyone think of the second half (my proposal)?