Why Should Taxpayers Give Big Banks $83 Billion a Year?

>The sad truth, to me, is that we are responsible because we make our governments spend too much money.

Our governments do not "spend too much", the main economic problems we have are too much bad debt (leading to zombie banks), an excess of fraud in the financial sector and not enough economic activity as a result, resulting in high unemployment.

A government can never spend too much money (it is created with a few strokes of a computer keyboard). They can only spend beyond the limits of the economy's capacity. Right now almost every western economy is operating way under capacity, which is obvious if you look at almost any metric from inflation to employment to inventory.

The government spending more would actually help, although what we really need is for the banks to start writing off bad debts - which they don't want to do because then they would be insolvent.

We don't make the government spend too much money, they chose to spend all that money because they are backed by the people who benefit from the spending of all that money, and its not the working or middle class. Remember those discussions about how bent and corrupt lobbying is? They are the people getting your money. Not "we".

Makes me laugh, all the US revulsion to socialism, while the US has one of the biggest state funded job creation strategies in the capitalist west. Its just that it is called the military rather than anything too socialist sounding. It also get the poor an education, at the risk of their lives. Shame its about killing and paranoia, rather than creating and earning.

Yes, the military drive some innovation, but man, really? In the 21st century?

The central bank garantee there banks that the would not be allowed to fail, this was clearly stated in a report around 2004.

Who is we. I dont think that if a big banks fails everybody in that country is fucked. Fucked are the people working there and the people who invested in that companys (this includes people with debit accounts since that not really diffrent from an investment).

The idea that banks are 'to big to fail' has largly been shown to be retoric. Analysis after every bank failure since 50 years has shown that actual failure would not have been as bad as predicited.

A large, powerful government is eventually taken over by corporate interests, and becomes an active enabler of corporate goals.

A small, conservative government of the sort idealized by libertarians is too small and powerless to influence corporations, which respond by taking hold of the reins of public power, as was true in the early days of industrialization.

Believe me, I'm not advocating some alternative like Communism, which history teaches is manifestly worse than the two alternatives listed above.

I think modern corporations are an unavoidable side effect of the evolution of modern societies -- highly organized, wired, and with a natural tendency to concentrate power in a few hands. All that remains is to see which hands get the power.

Government is neutral, much like technology is neutral, it can be used either for good or bad purposes, depending on who controls it. Right now, it is very much controlled by the big banks, but that doesn't mean it has to be that way.

Indeed your remark about regulations demonstrates exactly the point I was trying to make. Namely, that only the power of the federal government is strong enough to enforce things like regulations, which in principle are an effective counter measure against fraud and abuse in the financial system. It's not just in principle either, during the great depression, many reforms were put in place, such as glass-steigel, which stabilized the financial system for the longest period of time in american history; and many people point to the undoing of those reforms as a major contribution to the current crises.

A standard response to the above is to say: the new deal reforms didn't get america out of the depression, it was world war 2. Indeed, the reforms of the new deal were only partially effective because they didn't go far enough; and it was only when the entire population was mobilized behind the war effort that the government was able to intervene in the economy even more intensely than it had previously.

We can ask the interesting question: why do governments exist at all? It's because society is divided into separate factions which compete with each other. Modern society is full of contraindications, which expresses itself as conflict between the competing factions. As part of this power struggle, governments are formed with the purpose of setting up bodies of armed men, as well as other mechanisms, in order to enforce the domination of one set of these factions over the others.

If you have a better idea of how serious systemic problems like the current financial crises can be solved, without a strong federal government, I would be interested to know what that is. Or do you just think the situation is totally hopeless?

Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.

Makes one side seem a little less important to me.

I would want to scrutinize the calculations.

>> Big private corporations are as bad as big public corporations.

I think you miss the bigger picture the article paints, which is that the big banks actually function as part of the government in many ways. One aspect of this is described by the article, the big banks can't exist without massive financial support from the tax payers in the form of low interest rates and implied bailouts.

I also think you don't understand that only the power of the federal government can break up the banks. Show me one example in of all history where a big bank was broken up by a small decentralized governement? go ahead, ill wait...

Funny you say that. The banks that where baild out, where investment banks, the hole reason for such a rule was that normal banks would get bailed out and investment banks would.

But since its not actually about helping the people to bail out banks it did not matter.

> It was done in the past, and worked.

Where? Almost every big bank that failed was saved in some matter investment or not, look at the To big to fail book (or listen to this podcast by the author http://www.econtalk.org/archives/2009/10/gary_stern_on_t.htm...).

Almost all of the toxic assets, or more properly, speculative loss that will never be paid, was on the derivatives market which could be as much as $1.2 quadrillion dollars, 20 times the size of the entire world economy, of which even the $16 trillion in bailouts was a small amount.

The toxic assets have been moving around and ending up off of bank sheets and on federal government sheets as part of loan paybacks, which is more of the massive scam and stealth bailouts going on.

Every one of these mega banks should be dismantled. The same scams continue.

Or as a character in Margin Call put it:

"If you really want to do this with your life you have to believe that you’re necessary. And you are. People want to live like this in their cars and their big fucking houses that they can’t even pay for? Then you’re necessary. The only reason they all get to continue living like kings is because we’ve got our fingers on the scales in their favor. I take my hand off and the whole world gets really fucking fair really fucking quickly and nobody actually wants that. They say they do but they don’t. They want what we have to give them, but they also want to play innocent and pretend they have no idea where it came from. That’s more hypocrisy than I’m willing to swallow. Fuck them. Fuck normal people."

> The Bureau of Engraving and Printing (BEP) is a government agency within the United States Department of the Treasury that designs and produces a variety of security products for the United States government, most notable of which is paper currency for the Federal Reserve.[1]

[1] http://en.wikipedia.org/wiki/Bureau_of_Engraving_and_Printin...