Congress never thinks very far down the road. They're legislation always has unintended consequences. Look at Welfare, Medicare, Medicaid, Social Security, Immigration, Freddie & Fannie, etc, etc, etc... They all have solvency problems, or some big gotcha that was never foreseen that comes back to bite us in the butt later. Congress never wants to fix anything either because that would require hard unpopular decisions. They just slap a bandaid on it, and let someone worry about it after they're out of the office.
But lets just socialize everything and get it over with!
I'm not for socializing or nationalizing in general, but if a company is too big too fail, you don't bail it out at taxpayer expense, you let the people that assumed the risk to make the profit they deserved take the hit.
That's capitalism at it's most basic. If you assume the risk, you get the money.
These bankers & investors want all the money with none of the risk? They're begging for a friggin' handout after pocketing their profits for all those years. Come on. The only reason I'm suggesting nationalization instead of traditional collapse is that people who didn't assume any risk, and didn't share in the profits are getting dragged into it.
Make no mistake about it, Freddie Mac & Fannie Mae collectively secure & manage nearly 50% of all the mortgages in the entire United States of America. Around 5 trillion dollars in debt - as I mentioned above we're talking about a default as large as the entire United States Governments total outstanding debt (which is approximately the same size)! This is serious beyond the pale.
Bear Stern's was nothing... American Taxpayers assumed $30 billion in liabilities for Bear Stern's on behalf of J.P. Morgan (all of which they'll likely lose, since there's no longer any market for the the poisonous & complex securities & derivatives the company was peddling).
Total capitalization of the entire Federal Reserve is about $800 billion off the top of my head, about 50% of which is unavailable because it's been loaned & swapped through Paul Bernanke special vehicles to other banks who also got themselves into messes. But we're talking 5 trillion.
This is a serious situation. Hell, I think you could charge the inept managers of these Government Sanctioned Enterprises with treason all things considered. I could find you 12 people who'd convict...
I will agree with you on one thing Stereodude, less, milder market intervention, earlier, (like proper regulation and the enforced imposition of honest accounting practices) would have been far suitable to massive intervention that American taxpayers and their government will now be forced to undertake.
