Economic Bail-Out...

[Imperator Rex]

Here's another cartoon opinion on the number of economic bail-outs that we have seen over the last two years. I have my own opinion about this, but I will post mine after a number of people have posted theirs. It seems to me to be one of those "necessary evils" in life. Those plates at the Bureau of Engraving and Printing are probably red hot by now. I'm surprised our Fed Reserve Notes don't have scorch marks on them.

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[Sabastos]

No kidding. THis is hilarious! But you know that we won't put much of a dent in the public debt in our lifetime. I'm sure a big part of what they can pay in taxpayers will get back in a series of tax credits and incentives for several more years. Our kids and grandkids will have to survive this somehow.

[Yávaros]

I agree. This is very funny! It is true how history repeats itself! At least the U.S. is not doing what Mexico did years ago. Instead of bailing out the banks, the government nationalized them. It took them about 15 years to realize what a mistake that was and sell them back to private companies.

[Imperator Rex]

Hopefully we won't have to go that far. This does remind me of when the feds took over the Mustang Ranch in Nevada because of the owners' tax evasion issues. Within the next severla years, the trustees in charge of the Ranch's assets and operations managed to run it into the ground. It no longer exists. But what a statement...the government is so inept at running businesses that it couldn't even get a brothel to turn a profit. Now, that's pretty bad.

[Basileus Romanus]

Nationalizing is a waste of time in economies this big (I'm referring to the US and the G-12). I like the example of the brothel...it makes sense. I really think some industry segments should be classed as public utilities and scrutanized a lot closer. But that creates its own set of problems. The sitution happening how is that the banks can't (or won't) find suitable people who qualify for loans. That's what the bail-out money was supposed to do. You need to get capital to generate growth. The feds should fine or tax the banks if they don't create a certain amount of loans by a certain time. That will get them interested in loaning money again.

[Marzano]

Based on what I read about this, the government made some fatal mistakes with this bail out for the banks. This is because the banks used this money to cover losses and enrich their stockholders instead of using most of the money to loan to businesses and help with refinancing for home owners who are losing their homes. It is a shame. The government needs to ask for the money back and lend it to people who really need it.

[The Ruescher Empire]

There was a lot wrong with the bailout. Bailing out the banks only leads to the same problem in the future. Canada had a very similar problem back in the day when Home Bank collapse and several others did in the early 20th century. You know what happened? No one bailed them out, it was painful, and regulation was imposed. The result? The Great Depression saw no Canadian banks collapse (vs. 9000+ in the US) and the recent recession Canadian banks didn't need a bailout of any sort. In fact many of our banks (including the largest, Royal Bank of Canada) continued to pay dividends.

So tell me what is the result of bailouts? Continued pointless risk taking with the assumption that they will be bailed out if something happens again

[Sabastos]

Obama and his buddies thought it would be a good idea to bail out the banks so they'd be able to increase loans to jump start the economy. Haven't seen much jumping lately.

[The Ruescher Empire]

It wasn't Obama so much as Bush....

[Basileus Romanus]

True. It all started with Bush, an embarrassment to the GOP and all things conservative. His adminstration's lack of oversight on the housing market and leaving those greedy bastards at FreddieMac and FannieMae to their own devices are the primary causes of this whole disaster. The bank bail outs started with Butthead Bush and then were increased by Butthead Obama. We all know the banks were supposed to use this money to extend more loans and help homeowners refi their overrated shacks. But, as well all know, they decided to use part of it to pay out obscene bonuses to their executives, another part to increase their cash flow and working capital, and another part to offset their toxic assets (which they later sold to the Treasury). The Treasury then turned around and made the Fed Reserve monetize the debt created by that horrible decision to make yet more fiat money available to release to other segments of the economy as additional bail-out money.

Terrible, terrible, terrible *in a French accent* (it sounds more tragic with the French accent).

We've essentially mortgaged our children's, our grandchildren's and our great-grandchildren's futures. And what's going to happen in a couple of years when the world decides not to use the dollar as a reserve currency. Can you say hyper-inflation and devaluation? Get rid of your dollars. Buy property (it's dirt cheap now...banks are dying to get rid of the these repos because they can't sell them to the Treasury anymore), hard tangible assets, and precious metals that you can sell for new devaluated dollars in the future.

[The Ruescher Empire]

Well you are right that is was both Administrations who are participative in the problem. Mind you I understand continuing Executive bonuses and such as it was a way to retain talent, but I also say they shoulda let the banks fail that woulda failed. Bush had the opportunity to increase regulations before the problem occurred to stave off such a collapse, but he didn't.

You are right about the US dollar becoming worthless in the future though, it's gonna go the way of the old German Mark after WW1. You know where it caused the greatest depression in German history, allowed the rise of the Nazis and other radical elements, and eventually cause them to scrap the Mark altogether? Ya great planning there for the Americans. All I can say is I'm glad my country (Canada) is trying to build closer ties with Asia, hopefully we can hop off the sinking ship known as America before she goes down

[Yávaros]

Yes and so is Mexico. Unfortunately, there is so much tied to the US economy and the dollar that when America sneezes, we get the flu. America has for a long time lived too much on credit. You have to pay those bills sometime in the future. That is what happened to Mexico in the 80s. They too out too much credit in the late 70s thinking that the price of oil will continue to rise. When the prices dropped too far down, Mexico could not pay its debts and had to remedy part of their default problem by devaluating the peso. We had many years of high inflation. The matter became so terrible that the president had to order the nationalizing of all banks to keep dollars and other reserve currencies from leaving the country.

I remember some of this and I was just a little girl. I can remember getting a 500 peso coin from my uncle one day. I wanted to buy some candy I saw at the store earlier that day. When I went the next day, my 500 pesos only bought half of the candy that I saw the day before. I did not understand why the candy cost twice as much. This was a day after one of the devaluations.

[The Ruescher Empire]

Hence why nations really have to start planning for the fall of the US. Canada is attempting to diversify, but sadly many nations still depend on the US far too much for its growth. China is gonna have a hard fall too unless it allows domestic demand to pick up, right now it depends far too much on exports to the United States. Lets face it, China needs to expand its domestic demand, if it did that, it would never really need exports, as 1.2 billion consumers can generate far greater demand then the US ever could.

[Pontus Bosporia]

Ya, this is all real scary crap. It's a real problem for Americans because we think that nothing like any of this can happen to us. We think that nothing will ever change for us. We'll weather this like we did other things in the past. But people don't understand that this isn't like all those other things in the past. Even though the Great Depression was really horrible, I think we're actually more screwed up than we were then. Some older folks in my family talk about this and remember their parents telling them how it was in the 1930's and then they say that having a war on the scale WWII will straighten out all our problems. But I don't think that would work in these times.

[The Ruescher Empire]

Have to say Pon, it's pretty funny because I've always said we need another World War Problem is it would like be the last war we ever have as most of us would die. Another World War would certainly disrupt the global marketplace, but all those imbalances would be quickly fixed with massive spending. The only nations that could likely survive another World War is probably China and India as their populations are so massive....