Radical bailout!

[sanketp]

does bush administration make the right decision to bail out big company with jawdropping price tag? to me that is ridiculous.

what say you?

[Fergal]

Personally I think that they did make the right decision. I don't say this because I think the big banks deserved government help. I believe that the bail out was the right decision because if these major corporations went bankrupt, there would have been a devastating affect on the American economy, to the detriment of everyone, rich and poor.

I would certainly hope that the government has put stringent conditions on these bail outs, so that the government (and hence the tax-payer) has a good prospect of getting this money back.

They should also enforce strict controls on the banking and mortgage industries, in an effort to ensure that America never finds itself in such difficult economic times again.

[Nazreen]

The bad thing about the U.S. government's bailout plan is that it will also increase increase the amount of debt for the U.S. U.S. is still the country with the biggest debt. A lot of Americans are also now complaining and asking why the U.S. have to put in money into failing companies.

The good thing that happened is that global stocks has surged with the bailout. :)

[Fergal]

I read a newspaper article yesterday (after I made my post above) that suggested major banks are prone to spinning the line that their success is closely entwined with the success of their country's economy. The writer suggested that perhaps this may not be true and that governments should not be in a rush to bail them out. Personally I thought that this was an interesting perspective and that perhaps we should ask what would be the real long term damage if a major bank did go under.

I'd imagine that if banks knew that governments were not going to bail them out, they might be a bit more careful as to how they manage their business and be less likely to get into this type of trouble in the first place.

Banks are also supported by governments in that their customers' deposits are largely protected by the government should the bank fail. The Irish government announced yesterday that they were increasing this level of protection up to €100,000. In other words if you have €100,000 or less in your bank account and the bank goes bust, you will not lose your money because the government guarantees it and will compensate you.

I can't think of any other business where the government directly guarantees customers against losses resulting from the potential bankruptcy of the business.

[Nazreen]

Some people have said that with the bailout, the U.S. economy will already recover. That's why with the news of the bailout, global stocks has surged. This might just be a temporary relief however. In the end, it still boils down to the real economy of the U.S. If the problem with US housing is not resolved and job cuts continue, the market will still go down. This is the real issue that must be addressed by the US administration.

[taki]

The United States Government is planning a bailout of the biggest businesses in the country as I type. They have been bailing out other companies for decades now. All of these businesses made bad decisions that left the venerable to failure. And yet if me or you make some bad business decisions we can't even get a loan to try and fix it.
This is probably the most unfair bunch of political garbage I have heard in my entire life. And it makes me angry, very angry. Who do those people think they work for? 5% of the country or the other 95%?
Washington is full of scumbags now a days and quite frankly every single one of them need to be voted out.

[Nazreen]

There's already a thread (http://www.businessadviceforum.com/showthread.php?t=1243) created for this taki.

There's a lot of debate in the forums about the US bailout and a lot of Americans are angry with this. A lot of people have lost their homes but the government is not bailing them out. Quite a few retail businesses have also gone bust but the government also didn't bail them out. I have to agree with this sentiment but at the same time, I also think that without the US bailout of AIG and other big companies, the US economy will further slide down. After the bailout, I think the US government should go to the root of the problem: US housing problems and rising unemployment rate.

[Fergal]

Threads merged. I do understand where you are coming from Taki and I often feel the same way myself. But the truth is that if the Government didn't bail out the banks the whole US economy may suffer dramatically and everyone including home owners and small business owners could be much worse off.