Josh-Daniel S. Davis (joshdavis) wrote,
Josh-Daniel S. Davis

What do you think "bail-out" really means?

I wonder what would have happened if, instead of government loans, GM, Chrysler, and a quarter of banks and funds holding peoples' savings were allowed to completely fail.

Also, why does it make any moneyed institution "bad" for making stipulations on how loan money is handled until the loan is paid off?  In this instance, the companies had already failed, and it was just a matter of short time before all of those workers were unemployed, and possibly lost all of their retirement savings.

The reset would have been collapse, and for the other companies to buy the pieces, assets, brands, etc, and re-hire some of the workforce.

The problem is that when the workers lost their jobs, they would stop spending money.  This large of an amount of unemployment would have hit unemployment insurance funds, and the cash-flow of most other corporations.  The loss of cash flow would have dried up surplus cash reserves, as companies struggled to downsize to the lower demand.  This would create more unemployment.  The bottom would have been what, 30% unemployment?

At that point, there would be riots in many many places, much more than we have security/police forces for.  The cost to the government to protect those who were still employed through sheer luck, would be enormous.  This would be "the zombie invasion."  It wouldn't be some biological disease, it would be hunger, resentment, and loss.

42% of US households have guns.  The hungry and the not hungry would be forced to use them to protect their families.  We would have a civil war, based on hunger.  And then there would be disposal of the bodies to deal with.  There would be properties abandoned because the family fled, or was killed.

This is all speculation of course, but it's not "worst case" and it's not overly extreme.  It's entirely possible.  More likely, the federal government would be forced by the populous to deficit spend in order to feed the people.  This would have been a much more socialist policy than what the economic right wants.

There are very few corporations in the country other than the federal government who could fund this sort of "bail out".  You didn't see Ford offering to buy junk bonds of GM and Chrysler.

So really, a few billion in loans to help bankrupt companies restructure was a necessary evil.

Why am I even talking about this now, since it's passed?  I don't know.  The thoughts just came to mind, as I've found a good number of very fiscally right people on my friend's list, and I just don't see how a purely free market would in any way help anyone other than the lucky, uncommonly cautious, and those who have resources already.

I don't think the far left is good either.  Overly taxed leads into an authoritarian structure, but I think some manner of government intervention, just as a power competition against the oligarchies of big business, is a good thing.  This can be had, without giving up too much personal control to the government.  People need to understand that zero corporate regulation is no the same as zero personal regulation.  Corporations will regulate consumers.
Tags: companies, government, money, thoughts, words
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