The ongoing bailout list of the financial system
projects.propublica.org
projects.propublica.org
Look at it this way: this is $627b that have not been spent on schools, education, health or infrastructure. What could have been the return on those?
It is $627b that have been spent to disrupt and hinder potentially flourishing competition. It's $627b spent to foster centralised industries and strengthen companies that already have a pretty high market share.
The bailout program is massive and it is an absolute disaster and one of the most undemocratic acts that western nations have done in the recent decades... I mean they gave free money to Goldman Sachs! That is Goldman Sachs, the company that probably has the highest number of alumnis amongst presidents of countries and leaders of the most powerful state/international instituitions. And a company that keeps running at a pretty decent profit margin...
Why should these organisations get free money when the rest is told to work for it?
What was the goal of the bail out? It wasn't profit since the return on the investment in economic terms is horrible (and was so predictably). Compare for instance how the dow jones developed over the same time period.
The goal was to keep these massive corporations afloat, to subsidize them. Now you could say, so what? The problem with this is first of all the missed opportunity cost and second of all that it was a clear sign that tax money, if push comes to shove, will be used to bolster corporate profits. And that is what makes this such an anti-democratic act.
Tax money is meant to be put back into the society, it is not meant to be re-purposed to be someone else's profit.
Well the facts are that they gave loans which are paying off when you look at the list. So the real “injustice” here is that the government went into the lending business and “stole profits” that otherwise would have stayed in the financial sector. Yet they only did so because the entire financial sector was devoid of liquidity to fix the situation. As for “what about schools!” And similar, well the investments in the financial sector which are now paying out can be used in these areas. Not going through with the bailout, putting all the money into the education system and watching as the entire country goes into a recession would not have procided eventual payouts that could be reinvested into the financial system down the line. When your house is on fire, you don’t gain anything from renovating the facade.
- what was the agreed rate of return at the time the loan was given?
- To maintain your image: why was the house on fire? Was it perhaps because of the enormous centralization of the financial market in the previous decades, combined with a massive deregulation, starting in the 80s? (your facade comment rings odd given the Grenfell Tower disaster)
The loans were given because the large financial institutions weren't able to make the profits they promised to their shareholders. The money which, no matter how you look at it, was free at the time, was an intervention in order to mediate the profit issue. That now ten years after the fact some of this money came back (of course shareholder returns were always prioritized during these years), is not a success by any means neither in terms of ROI nor in any others I could come up with.
Indicating that opportunity costs that are related to central government tasks in a democracy (education, health, infrastructure) are some form of luxury, only normalizes oligarchic structures.
> As for “what about schools!” And similar, well the investments in the financial sector which are now paying out can be used in these areas.
No one who says this should be trusted with money in my opinion, I'm sorry. But forgetting about the fact that democratic governments are not businesses and assuming that this is just a profit maximizing activity:
The obvious alternative would have been to take the whole money and inject it directly into the economy across all sectors. Make the grossest simplification: just buy all the DOW stocks. That way the ROI would at least have been somewhere decent. Don't get me wrong, it would still have been an absolute insult to democratic ideals, but hey, at least we would have gotten some cash....
I honestly don't understand how intelligent people come up with this argument... perhaps that says something about me more than about all those people I heard saying this... so really, please, help and educate me on this one, mate.
It's not free money. It's a loan that needs to be repaid. Market rate interests are also being paid on that loan. The government is making money from those bailouts.
If you don't like working then you are free to take out loans against your existing assets (shares, real estate) and be a capitalist. But managing or investing money is still hard work (though different) and definitely not "free money".
> It's not free money. It's a loan that needs to be repaid. Market rate interests are also being paid on that loan. The government is making money from those bailouts.
You seem to know your econ. Maybe you could help me. Would you mind calculating the ROI for me on this ten year loan please? Must be similar to the market rates in 2008 I guess...
> But managing or investing money is still hard work (though different) and definitely not "free money".
There's a really good book that touches on this and has some nice case studies: Thinking fast and slow by Kahneman (econ nobel prize winner if I'm not wrong).