07
Jan
10

On Air: Are the bailouts working?

The past year has seen the global economy on a life support machine, otherwise known as the bailout. Just as the scars seemed to be healing, Iceland’s decision to hold off repaying billions of dollars owed to the British government has reopened last year’s wounds.

If they don’t pay it back, it may well become yet another bailout – even if that wasn’t the intention.

Should Britain cut the noise and accept that whilst this might be the bailout they never wanted, it succeeded in calming things down?

Likewise, with the dust settling and things not looking as bleak as we might have predicted- should we accept that the bailouts did work?

Many experts are certainly impressed at the speed at which the economy is getting back on its feet.

The crisis has even resulted in some winners according to these economists for whom Asia, Australia and…urm…journalists have come out on top.

Have a read of James Altucher on the Huffington Post. He slams every reason posed by Republican Congressman Ron Paul for why the economy is doomed.

The bailouts have given banks a free ride and they should be more grateful according to this article.
‘Last summer, somebody put a bale of hay on a country intersection north of New York City, with this sign taped to it: “I got my bail out.” ‘ With bonuses back on the scene, have bankers learnt any lessons or has the money been taken for granted?

The bailout has been in vain writes Rabbi Shmuley on the Huffington Post
“Welcome to Wall Street, whose bankers, after nearly collapsing the global economy, have learned nothing from their greed and who have become more voracious than ever.”

Has the bailout just fueled bankers’ bad habits?

“Leave bankers alone,” says British banking’s most senior representative.”There are literally tens, if not hundreds of thousands of British jobs directly and indirectly related to banking – bringing billions of pounds in tax income.”

When the bailouts were first announced many of us were fuming. Is it now time to congratulate our governments for making the right decisions? Were the bailouts a risk that paid off?


79 Responses to “On Air: Are the bailouts working?”


  1. 1 Ibrahim in UK
    January 7, 2010 at 11:27

    Did they work?
    They worked in maintaining the model of creating debt and calling it wealth.
    It worked in taking money from the poor and giving it to the rich.
    It worked in re-establishing banks as the Gods which society cannot afford to let fail.
    The same model that brought us to the brink will bring us to the brink once more in the future, but as long as we have our mortgages and 2 cars and widescreen LCDs and yearly holidays, we’re more than happy to live and die in debt.
    Someone else will pick up the tab.

  2. 2 sascha
    January 7, 2010 at 11:55

    For the bloodsucking bankers they did.
    So much so that the BONE-US culture is back.

  3. 3 Frank in the USA
    January 7, 2010 at 12:21

    Bailouts cannot work because they have not fixed the underlying problem, which is too many people with a standard of living that is beyond their means. All the bailouts have done is postpone the inevitable at the price of making it worse.

  4. 4 Guido, Vienna
    January 7, 2010 at 13:17

    The bail outs at the begin of the crises were necessary, but why do our governments are going on rescuing banks?

    It has to be clear that not all banks are rescued to get the sense of risk back in the financial system.

  5. 5 Guido, Vienna
    January 7, 2010 at 13:20

    I think that some of the bail outs are protectionist measures to ensure that headquarters of major banks keep in the country.

  6. 6 Nigel
    January 7, 2010 at 14:09

    If you cannot deal with the human weakness named greed then the matter will never be solved. It was an elderly and wise Englishman who told me once that “rules are made for fools to obey, and for the guidance of the wise.” The greedy will always find a way around any rules or controls that are put in place……even jail

    • January 8, 2010 at 05:11

      Only too true, Nigel, a very wise Englishman, a Queen’s Guardsman back from the war, said, ” “Rules are for the guidance of wise men, and the blind obedience of fools.”

      More than fifty years later; the words are just as crystal clear as the day they were delivered to me, and it is a pity I can not put his photo on here for everyone to see what a proper English Policeman looked like in the real life days of “Life on Mars.” and the city streets were perfectly safe for everyone day and night, when men like Peter Cain and Dennis Wood walked the city beat.

  7. 8 ARTHUR NJUGUNA
    January 7, 2010 at 14:11

    To restate the reasons behind the crisis, it was due to a creation of an artificial shortcut to wealth by banks and economists which was sold to the masses. As a result people found it a waste of time to evaluate expenditure, no shrewd buying or investing since “easy” credit was guaranteed to augment the shortfall. It ment that products and services went up beyond reasonable value since the money supply was proportionately higher. Naturally collapse was inevitable and this structure (bubble) had to collapse.
    Were bailouts a risk that paid off?
    Hardly, because the banks are still pursuing that model to stabilize the bubble. Secondly we should ask whether the ordinary investors learned their lessons. In the latter case my answer is no because credit produces a kind of addiction. The majority who were lured into this trap truly feel embarrased but that addiction is still there. This is what I faer is going to land us into another mess. Lastly economic bubbles take a long time to contract. We are not yet there despite hopeful chants. A lot of people formally employed are still without jobs. Costs of production and transportation of goods are still prohibitively high lot of . I am aware now that the cost of fosil fuels is once again slithering upwards.
    The gains are minimal – we should wait till the last quarter of this year so that we can somehow know how it has played out.

  8. January 7, 2010 at 14:21

    Lessons should be learnt from the financial crisis. However there should not be a witch-hunt : bankers should not be castigated for all the failures. Mistakes were made and these need to be investigated. The contributions of bankers and financial staff need to be recognised. Depriving them of legitimate bonuses is not the answer. Otherwise we will find financial experts leaving their positions in droves. Everything needs to be looked at dispassionately and weighed carefully. Only after a thorough investigation by a Parliamentary Select Committee can banking and financial reforms be put in place. There should be more cooperation between central banks. We should value financial expertise and advice. Bankers deserve their bonuses as recognition for their intellectual input. But these bonuses should be fair!

    • 10 Tom K in Mpls
      January 7, 2010 at 19:28

      Very true, there are many issues and no one single blame. You could state greed, but it is the greed of the consumer as much as the banker. Bonuses were/are a way to pay people that meet goals. Hire a group at a ‘low’ salary and reward those that succeed, very smart. The problem occurs when the goals were unwise. Don’t blame those that do what they were hired to do, blame those that set the wrong goals.

    • January 7, 2010 at 19:50

      What contributions? Hello!!!! Today, one bank I know pays bonus and extras up to 500 X their employees. 30 years ago it was 5 to maybe 10 times. By that same token this bank pays entry level employees $8.00/hr, with perfect credit and a bachelors degree. 30 yrs ago it was $5.50/hr, with a high school diploma. Help? With that type of help, give me something else. Service industry. Redistrubtion of wealth that this country is so frightened of has been DONE

  9. 12 scmehta
    January 7, 2010 at 14:24

    The bail out did work as a support system for the ‘sick fish’; but, the bail-outs were largely doled out to the ‘very sick big fish’, the small ‘fish’, sick or not, was either already devoured by the big ones or they were left to die. Firstly, there should be no further bail-outs; if at all there are to be any, on compassionate ground or extreme urgency, then, for that, we better lay down a definite and uniform yardstick both for the small and the big ‘fish’. Presently, we need to withdraw the stimulus money as soon as possible, so that the ‘sick’ ones learn to stand firm on their own feet and to remain healthy; they should not indulge into ‘over-eating’ (at the expense of the public and/or the government) to spoil the system’s ‘health’ by falling ‘sick’, and later, also have the audacity to ask for the ‘medicine’ or to be saved.

  10. 13 gary
    January 7, 2010 at 14:40

    Bailouts will maintain the system. If you think it worked before, then it will again function to your delight. Of course, if you think bribing the thieves to continue stealing is a bit over the top, then you won’t be happy with this result.
    g

  11. 14 Peter in jamaica
    January 7, 2010 at 14:52

    The Bailouts did work in stabilizing the global financial sectors but it has only helped the companies that received them and its stopped there.The aim was to “spend” our way out. The money was given to allow this to happen but the banks are now just sitting on the cash, paying out their big salaries and bonuses and not leaning and crediting anymore just so that their book can look good at the end of the day. Meanwhile businesses are closing down and adding to the unenployment because they won’t release the monies needed for them to survive.

    So did the Bailouts work? its not an easy answer it would depend on which side of the coin your on.

    • January 10, 2010 at 20:19

      Dear peter your half way there but you are forgetting the toxic assets, the bits of paper with no value, the banks can not put a value on them thy are hoping and praying that in ten or twenty years thy may be worth something, the big BUT is now body knows.

  12. 16 evets
    January 7, 2010 at 15:00

    The problem was not just the bankers, but the irresponsible borrowers who were living beyond their means. The bankers just enabled them. Watch, when the first time home buyer’s credit in the US ends this spring, the housing market will decline again, and since the “recovery” is jobless, people still won’t be paying their mortgages until they get work.

    • 17 Mike in Seattle
      January 7, 2010 at 16:49

      Once again you completely ignore the fact that people weren’t spending their money on luxuries, they were spending it on health care. The vast majority of bankruptcies are due not to spending money on huge television sets but on catastrophic health care costs.

      • 18 Tom K in Mpls
        January 7, 2010 at 19:34

        NOT ON LUXURIES!!!! 4WD SUVs in cities, 3k sqft homes for 2, 50″+ HDTVs, $400 phones, $70 jeans…. Look at what was financed. Food and health care was not financed.

      • January 7, 2010 at 19:53

        Healthcare was not financed? Does that mean I don’t have to pay all those doctors back the thousands I charged? Thanks!!!

    • January 7, 2010 at 19:54

      Many people were lied to and signed loan documents they did not understand. When someone offers you a chance to make your family’s life better and makes it look like you can handle the cost, you do it.

  13. 21 Jenni from NW
    January 7, 2010 at 15:00

    People (especially opposition parties) find it easy to criticise the bailout. But, if they had not stepped in to save the banks, it is the ordinary saver that would have suffered. Yes, interest rates are low but it is better than losing everything.

    The stimulus package, including low interest rates for savers, was designed to get savers spending to buoy up the economy.

    It is a travesty that those in charge of banks are now carrying on business as usual. I agree their ethos needs to change. But, we have to acknowledge why people in investment banking opted to work in it. They are motivated by personal wealth and greed. So, sadly it seems things will not change unless we, as a society, devalue its importance.

    At the same time, the public are also to blame, no-one forced people to take up debts they couldn’t afford. No-one forced anyone to buy into the hype of investing in properties and property development, which in turn falsely inflated its true worth. If people can’t afford it, they shouldn’t have it; the resulting demand would help things level out to their true value.

    Balance has not been restored and we will most likely face this situation again in the future.

  14. 22 Mike in Seattle
    January 7, 2010 at 15:11

    The bailouts are an incomplete solution. Yes, we needed to stop the bleeding but now that it’s taken care of there needs to be incredibly strict regulations to prevent this sort of thing from happening again.

    Also, the governments have ever right to go after banker’s bonuses. It’s not fair that bankers profit when their crazy bets pay off, but the rest of us lose our jobs and homes when their bets lose. If they expect us to socialize their losses then they should expect us to socialize their profits as well.

  15. 23 Roy, Washington DC
    January 7, 2010 at 15:38

    There are historical examples of government money spending actually reviving the economy (see: the Works Public Administration during the Great Depression). Padding a CEO’s pocket helps nobody, though, and it’s only going to revive a company that perhaps should have been allowed to fail, or at least been broken up.

    If by “working” you mean “propping up a system of über-corporations that are too powerful for the government to want to keep in line”, then sure, they’re working.

    • 24 Tom K in Mpls
      January 7, 2010 at 19:38

      30% of public works projects failed within 10 years due to lack of money to support them. The debt they created was crippling until the increased production from WWII was directed to civilian production. Most consider it to be more a failure than not.

  16. 25 viola
    January 7, 2010 at 16:22

    The recipe for entrepreneurial success used to be “Find a need and fill it.” Now it seems to be “Create a problem and pay me to fix it.”

    It’s impossible not to be cynical.

  17. 26 A R Shams
    January 7, 2010 at 16:27

    Bailout is / seems like bandaging a cancerous spot giving no proper treatment while the cancer spreads ultimately throughout the body more rapidly causing severer damage to the body than ever before.

  18. 27 T
    January 7, 2010 at 16:44

    No they’re not. Here’s one key reason why.

    Personal debt. How come the “experts” (including the BBC financial presenters) never talk about the percentage of personal debt to GNP? If things are improving, how come this ratio is the highest it’s ever been worldwide?

    Do you really need a degree from (fill in the blank) to see this?

  19. 28 Robert Macala
    January 7, 2010 at 17:08

    Sure it worked, but only for the people involved in the upper management of the Banking
    System (the Cabal and their lackeys )…for the rest of us, the Common folks, regular people, the man and women in the street (also, the ones that fly commercial airliners)… well, we paid for it…we’re also the men and women who service in the armed forces, are sent by the same cabal to the middle East and elsewhere to defend liberty and democracy and the international banking system. We’re called “Heroes” to motivate us and we are on the front line of terrorism. Oh, we grumble and complain but it does no good because that is the system
    we are all part of…we are easily frightened by the Cabal that control of the various communication agencies and system of public opinion management. That’s the way it has been in the past, and the way it is now…one hour of global whining and kwetch on WHYS…
    and after an hour of global venting and it’s back to business as usual….

  20. 29 Robert Evans
    January 7, 2010 at 17:29

    I have been unemployed for the past 18 months and as yet do not see any possibilities of gaining employment in any sector of work I am qualified for. This is not good at this time of year because the sales are on and I enjoy buying things. So I think that some bail outs are working but they need to be the right ones like the car scrapage scheme here in the UK I feel that has worked and would like to see that extended until the car manufacturing sector is secure.

    I know that we British dont own many car manufacturers but the ones we build are very high quality because the staff who build them are highly qualified and trained members of the staff.

    I feel that the governments should put some money into a grant scheme which would finance small interpreters to start their own company. This would benefit the country as such

    More Tax

    The country would recieve more taxes from the new businesses

    Less benefits

    The country would not be required to spend as much unemployment money to the unemployed as they wouldnt be unemployed.

    Consumer confidence

    I feel that the consumer confidence would increase as more people would have more money to spend on the high street helping the other companies profits.

    So guys what do you think would it work.

  21. January 7, 2010 at 17:41

    Dear Krupa,

    The first bailouts were, as I remember, over 2 years ogo. One year before Lehmans and before anything in the USA.

    Do you not remember Northern Rock ??, queues of account holders lining up to get their money back, The UK government, Gorden Brown in particular poured British Tax payers cash in and declared “It all started in the USA”

    At 12.5% of GDP the UK is now very much worse off than the USA (9.3%).

    Did it work??, Well had the government acted properly and as with all bankrupt companies appointed a Trustee in Bankruptcy, (Chapter 11 in the USA) the assets would have at least belonged to the tax payer, obscene bonus’s would have been avoided and eventually tax payers money recovered.
    Yes it worked to stop a complete financial meltdown around the world, but two better questions are 1) who caused it!, answer = Brown and the regulators + bad bankers that should have been sacked (plenty more to take their place, failed bankers are bad bankers) in the UK… same in the USA but a different B.. 2) What is the future cost of these disasters and the more recent disasterous money printing (Financial Quantitive Easing)?

    Lee Green
    International Financial Adviser Prague and Hungerford

  22. 31 Miriam Hyde
    January 7, 2010 at 17:45

    Did the bailouts help? Not for ANYONE I know! My (married) daughter, and I, lost our jobs in the last few weeks. My husband is still unemployed. As are many of our extended circle of friends. Has it changed anything for any of US? What did bankers kids get for Christmas? Mine only got a few things because we got some help from a church. When did they last get out for any kind of entertainment? Have their utilities and phones been turned off? We were supposed to buy our house last October. Our fabulous landlord has let us stay in our home while we’ve scrambled to try and keep up with rent, and the option remains open. However, we’ll lose the $8000 tax break if we don’t do it by March. We’ve adjusted as best we could, but it has been very, very difficult. The atmosphere in our home is different. Everyone is tense and we tend to fight much more than ever. I’ve seen my husband cry; feeling an abysmal failure.

    A few people here mention the bonuses bankers, and others received (or will). Bonuses are meant to reward a job done excellently. What the hell have they done excellently?? Fair? Legitimate? Who are you kidding? Again, no one I know got a bonus this year, and most didn’t last year. Those who are working are happy just to have a job!

    As far as borrowers being irresponsible, just what would YOU do if someone offered you a treat, a dream come true, followed by more, with assurances that noting bad would happen? Be honest, you would grab it and hold on tight!! The vast majority of the borrowers were in that position. Lending companies played on our emotions and gave us hope that we could have the American dream. That vast majority weren’t out to scam, or to lose their homes to foreclosure.

    If you still think that “Main Street” is at fault, grow up, open your eyes and smell the stench. Or maybe, you just haven’t been adversely affected. But wait, there’s still time. You cold be next.

  23. January 7, 2010 at 17:48

    Bail out is akin to lending more to your debtor to collect your old debt.
    If you borrow less the you are afraid of the creditor;if you borrow huge sums the creditor is afraid of you.
    Bail out is a political gimmick to give the impression that every thing all is well or at least shall be.

  24. 33 Tom K in Mpls
    January 7, 2010 at 18:01

    The only benefit was, some upper management can keep their jobs a little longer. The whole system needs what is called an adjustment. This is when the prices of everything from burgers to stocks change to fit the new economic reality. Bailouts were intended to allow us to return to the old massive debt way of doing things. This will not work. Most product prices have not changed. Gas and stocks, yes, but little else. The collapse will have to find it’s own end. It ain’t over yet.

  25. 34 Billy Wachakana in Kenya
    January 7, 2010 at 18:22

    All the financial institutions need to regulate the way they pay salaries to their employees and the way they spend them on employee vacations. here in kenya for example the top management employees are gettinig a lot of money in terms of salaries. i would call that in my understanding as an abnormal income. I believe this happens in other countries as well. this makes the banks to make losses beyond imagination then at the end of it they want financial bail outs as you call it from governments or even bigger financial institutions. this bailout culture must end.

  26. 35 Shannon in Ohio
    January 7, 2010 at 18:32

    Are the bailouts working? Perhaps, but no one around here is… In my region, the unemployment rate is well above 10%.

    Better yet, pose this bailout question to my former next door neighbors, who both lost their jobs just after the meltdown. A few months ago, their house went into foreclosure and they were evicted–along with their three very young children. No bailout for them.

    Thank goodness the bankers’ lives are back to normal: I can’t imagine how traumatic it must have been to have to, at least for a time, actually pretend to answer to other people. Let their multi-billion dollar money party resume…or did it ever really end?

  27. 36 Sylvester Christian
    January 7, 2010 at 18:36

    The bailouts are are failure in my view design to help Wall Street. President Obama should have adopted strict regulatory measures and effectively police the markets. TARP recipients must restructure all mortgages 15-30 year terms – stop all foreclosure actions for at least six months, better assist ailing CIT Bank to restructure to lend to mid-size businesses and community banks. Compel AIG to negotiate 60 cents on the dollar with creditors. Allow un-cap bonuses across the board with one caveat – 50% tax on bonuses $500,000 and over, & 40% between $250K & $500K. $249 & under in bonus tax at 25%. Longer terms for equity stake in banks receiving TARP Funds to at least 15 years with half of all board members appointed by the Gov. Heavy fines across the board for TARP recipients charging transaction fees and interest rates – culprits American Express & Bank of America. Re-appointment of Ben Benenke damaging to the President’s credibility and leadership. Enter into intl banking regulations with the EU.

  28. 37 patt in cape coral
    January 7, 2010 at 18:58

    I don’t have a very deep understanding of financial markets. The news keeps reporting that the economy is doing better, but I think they are referring to large financial systems, banks, and such. I don’t see that the average person is doing much better.

    • 38 Tom K in Mpls
      January 7, 2010 at 19:46

      Most businesses were well managed. They will survive. While things are not rosy, they are not collapsing either. They are the basis for new businesses to grow from. And it is growing at a sane pace. Many people and small businesses ( me included ) are hurting, but good financial planning is showing now.

  29. January 7, 2010 at 19:01

    I feel that they did work, but I despair that the underlying greed and close-to-criminal behavior will be dealt with by new regulation. We are a world being devoured by corporate greed.

  30. 40 ARTHUR NJUGUNA
    January 7, 2010 at 19:03

    Quite true, it is gloom everywhere as if the Asian economic scum sometimes back was no lesson at all. It seems as if that when there is a problem somewhere some clowns import it home. How do you live on a paper economy/wealth instead of real goods, how do you just buy papers to earn money you never worked for? The world now is awash with substandard goods made in a hurry to bring cash- adding zeroes to sum zeroes. We have lost good tools, medicine, good products too that used to serve our purposes well. Where is the Made in England anymore? The good cars have been replaced by expensive plastic ones as production is shipped abroad. LandRover is now an expensive joke Made in Asia stuff and some poeple think this is civilization. Better skills and financing is now in senseless wars that no one wants to conclude in a hurry since they seem to be goldmine. It is the only sector with new employment figures.
    The question is, what is ailing our commonsense which is now so compromised that it woun’t recover its shape? Things won’t change until we purge our weired view of reality is changed.

  31. 41 Tom in the U.S.A.
    January 7, 2010 at 19:05

    The bailouts in the U.S. (which by the way were implemented by the Bush Administration) worked. The main goal of the bailouts was to stop the U.S. financial system from collapsing and thus plunging the economy into a depression. Were the bailouts perfect? No. Are the banks profiteering from them? Yes. But they did succeed in their primary mission. And for that, I think we should be glad.

    • January 7, 2010 at 20:02

      I agree, Tom. I would add, however, that we need to add some strong controls on the financial industry. Otherwise, all we’ve done is saved them and assured them they can keep on doing what they were doing and we will save them again because we have no choice.

  32. 43 Tom D Ford
    January 7, 2010 at 19:13

    “Has the bailout just fueled bankers’ bad habits?”

    Yes.

    We still have no Regulations and Oversight of the Derivatives that are the root cause of the problems. And so the bankers, Insurance Corporations, and the other financial schemers and scam operators are still trading in Derivatives and continue to be a massive threat to the world economy.

    The bailouts have turned out to be just like giving heroin to an addict to relieve his symptoms without addressing the root addiction problem, which is the addiction to Derivatives.

    Send the Bankers into Derivative rehab! Cut them off!

    • 44 Tom K in Mpls
      January 7, 2010 at 19:52

      One simple event will fix derivatives, legally classify them as insurance. That would require them to hold funds for payout, which in turn would require them to charge a reasonable rate. It was suicidal on the part of that one division of AIG to not follow other insurance guidelines.

  33. 45 Kyle R (N. Carolina, USA)
    January 7, 2010 at 19:20

    Call me an anarchist, but after witnessing the conception, implementation, results, and collateral damage of the bailouts (worldwide), I feel as if it would have been more beneficial to humankind to let the irresponsible (borrowers/lenders/managers) shoulder their failure. With these companies going under and industries taking massive blows, yes there would have been (or be) plenty of complications and hardships, but maybe then we would start making more personally and socially responsible decisions with our money. We have to shed our ignorance and apathy of the entire credit system.

    And I can vouch that I would have been seriously affected by the failure of these corporations, but I still hold my point.

    • January 7, 2010 at 19:51

      The problem with that idea, is that the people who are in the most financial trouble would have been driven under. It is quite possible that people would have died. But, let them die and decrease the surplus population.

  34. 47 Irene in Texas
    January 7, 2010 at 19:28

    Banks have for years been causing inflated housing prices by offering easy credit to unqualified buyers. Their rationale was that property values would continue to rise, they wouldn’t lose money when they foreclosed on families. By the way, children do not make poor financial decisions but they are affected by them. Deregulation that allowed this was put into place during the Clinton administration. There were no corrections to this regulatory policy during the Bush administration and there haven’t been any during the Obama administration. The bailouts were nothing but a givaway to the people who caused the recession in the first place.

  35. 48 Asif Hameed
    January 7, 2010 at 19:35

    Bailouts have not helped the common people who are trying to make ends meet, bailouts have only helped the companies and those they did not lay-off to stay afloat, while the rest have sunk deeper and deeper even with the money pouring in.

  36. 49 Constantine from New York
    January 7, 2010 at 19:41

    I used to believe that you couldnt solve a problem just by throwing money at it. This bail out stratedgy is just that! throwing money at the problem till the problem solves itself. If only the bank would toss the money our way, the citizens of the bank’s repective country that is, would i begin to addmit that the stratedgy is working.

  37. 50 Robyn Lexington, KY USA
    January 7, 2010 at 19:48

    Alan Greenspan started the deregulation process. He thought he was dealing with people who had common sense to keep companies healthy. He was not prepared for the greed at the top who pay themselves millions of dollars in bonuses while they layoff 50,000 people at the bottom. That is not keeping companies healthy. If a company is doing well and they want to pay that much in salaries at the top, then I have no problem. But if you take bail out dollars, then no bonuses should be paid period. I think the bailout has stablized us for now, but there are many of us who may not make it through the next year. I don’t see where the top executives have learned anything.

    • 51 Tom K in Mpls
      January 7, 2010 at 20:02

      I like the general ideas, but the focus on top personnel pay is skewed. Look at your own math. Let’s say a $10M salary and the 50,000 employees. That is $200 per person. It really means very little. Also, on your own, find out how many companies have taken bailout money, how many have failed, and how many are still doing reasonably well. You will find the press and politicians over sell fear.

  38. 52 Chad, Kentucky, USA
    January 7, 2010 at 19:48

    The general sense from your callers is, “We can’t be expected to control ourselves.” That’s pathetic, isn’t it?

    Your American guest has it about right. Capitalism had nothing to do with it. The origin of this entire recession was the American housing bill from the 70’s that required banks to make risky home loans. Until then, free markets were doing fine managing risk. The US government required banks to increase the risk they would take on. So, unintended consequence was banks developing new mortgage products to accomodate risky mortgages, such as adjustable rate mortgages, and spread the risk around the economic system through derivatives. So, it was the idea that 70% of Americans should be homeowners and governments interference in the free market to accomplish that fantasy that began the 30-year march to this huge fallout. Blame government, not free markets.

  39. January 7, 2010 at 19:49

    The problem in America is that the conservatives have managed to convinced people that letting companies do whatever they wish is the best solution in all cases. As a result, we will have no strong, new controls over their actions.

  40. 54 Mandrake in Washington DC
    January 7, 2010 at 19:49

    The guest suggesting that 70% of Americans have ownership in the stock market repeats a myth that the majority of AMericans have an investment in seeing things go well for Wall Street.

    Most Americans like myself have money in the stock market but what would benefit me and other Americans like me is seeing a heavire regulatory hand from the federal government that would prevent anything like this from ever happening again and to make sure that “too big to fail” can not occur. What Wall Street wants is not in the best interest of average Americans.

    • 55 Tom K in Mpls
      January 7, 2010 at 20:09

      All that is needed to see that these economic troubles never happen again is very simple and easy. First, legally reclassify derivatives as insurance. Then remove the tax deduction for home loan interest. And then, eliminate government banks and programs ( Fannie Mae, Freddie Mac, HUD ) that give home loans to people that can’t afford them.

  41. 56 Tom in the U.S.A.
    January 7, 2010 at 19:53

    One of the callers confused the bailouts with the stimulus plan. They are separate programs. The bank bailouts (known as TARP) were approved under the Bush administration. The federal stimulus, on the other hand, was a creation of the Obama administration. Most of the funds of the stimulus have not yet been spent.

  42. January 7, 2010 at 19:53

    Bailouts are like cpr,the patient has been saved ,now the real work of realigning western economies, and the world economy has to start in earnest

  43. January 7, 2010 at 19:55

    As I understand it, US homeowners who can’t handle their mortgage can just turn in the house key and leave. I don’t know exactly how the ‘bailout’ works in the UK. In Iceland we have to face our debts, which have in many cases FAR exceeded the property’s worth. The creditors will drive us to bankrupcy and go after everything we earn as long as they care.

  44. 60 Anya
    January 7, 2010 at 19:58

    I think bailouts have worked to some extent, however I am furious about the bankers bonuses and lack of banking reforms. I’d really like to see stronger financial regulations, requiring the banks to hold more cash, splitting up large banks if necessary, so no one is “too big to fail”, and so on. More than a year after the crises it still feels that nothing was done to address the causes of the crises.

  45. 61 Patrick from NYC
    January 7, 2010 at 19:59

    Sorry but if you take one of these silly loans from the bank you are now paying for your greed. People who trust the banks need to brush up on history.

    • 62 Tom K in Mpls
      January 7, 2010 at 21:31

      This happened in the US in the 1970s. But it was farms then. The government wanted to increase food production to make food cheaper for consumers and international trade. It worked. But with low prices, farmers that took these loans could not afford to pay them back. So then we saw FarmAID and government cheese ( a bailout ).

      I have friends and family that were farmers then. Those that took the loans failed. The ones with a reasonable debt load had a hard time, but survived the low prices.

  46. 63 James
    January 7, 2010 at 20:03

    Not the way some in Washington, DC would like….. Most folks like myself don’t want to go back to the buy every single thing on credit life. It’s over we hope? It will take longer for a recover to take hold, but one built on less credit will maybe last much longer? I hope! That’s my plan and it appears to me a lot of other folks have the same idea. What else can baby boomers do? Some of us lost everything, the few remaining a float are looking to get the most bang for our bucks! We might live to age 90!

  47. 64 Tom D Ford
    January 7, 2010 at 20:03

    Your one guest tries to put the blame on homeowners for the mortgage problems but it was the Derivative markets that created and pushed that mortgage market onto consumers. The traders in Derivatives demanded more mortgages to securitize and sell as the basis for Derivatives, and their demand brought sleazy mortgage sellers into the market to lie to consumers and oversell those mortgages.

    The homeowners were the victims!

    • 65 Tom K in Mpls
      January 7, 2010 at 20:32

      Not even close to true. The housing market was the trigger of the gun. Derivatives were the bullet. Derivatives were sold as insurance on risky investments. The problem was that they invested the money they charged in a wide variety of risky investments, including some real estate. If they were required by law to hold funds in the same manner as car and life insurance, housing still would have had problems, but the world economy would have been spared. Homeowners were their own enemy. See my reply to Patrick just above.

  48. 66 Patrick from NYC
    January 7, 2010 at 20:04

    “Chad, Kentucky, USA” has it right. The politicians pushed for these requirements in an attempt to get the low income votes with promises of their own house. Who wouldn’t vote for someone wanting to give you a free ride.

    • 67 Tom K in Mpls
      January 9, 2010 at 23:18

      Once again, I agree more than not, but I think you miss a key point. Too many people are too stupid to realize something commonly stated in several ways. My favorite is, just because something works for you in the short run does not mean that it is right. More popularly, ‘there is no such thing as a free lunch’. The people that did vote by your logic are paying now. I hope they learned.

  49. 68 Tom D Ford
    January 7, 2010 at 20:07

    No, the bailouts are not working yet for The Common man”.

    And let’s remind ourselves that South Carolina Senator Lindsey Graham led Conservative Republicans in pushing through the 1996 Law that outlawed and forbid any Regulation or Oversight of Derivatives!

    If Derivatives had been properly Regulated and Overseen by government authorities, all of these problems could have been prevented, the sub-prime mortgages, the outrageous Derivative trades, the business failures, the homelessness, the Iceland bankruptcies, all of it could have been prevented.

    It all traces back to Senator Lindsey Graham and American Conservative Republicans as the root cause of our current and ongoing problems in the world.

    We have to regulate Derivatives as a central part of bailing out our world.

  50. January 7, 2010 at 20:12

    I think the banker re using this bailout fund to enriched them self

  51. 70 audre
    January 7, 2010 at 20:32

    It worked to the extent that it put a diseased moribund system on life support. No one cares about what is happening at the bottom where some people will never get a job again and the economy will continue to revolve around worthless endeavors.

    The patient is dead for all intents and purposes.

  52. 71 Kindi Jallow
    January 7, 2010 at 22:27

    How can fortunes that should have been spent for several years be given to one person just to spend extravagantly in bonus payment? What about those heroes who fought and died for the shake of defending the course of their country? However these greedy bankers are all labelled as members of Ilka Ida.

  53. January 8, 2010 at 01:15

    One has a hard time of helping oneself with their own priorities when everything around them is crumbling…Work hours, job loss, payment of bills, the list continues.

    I will simply say this. It seems that no matter where we live, or in what society, in these troubling times, that if we try to help ourselves, we only end up hurting ourselves, and failing time and time again.

    I question the President’s conduct of character and it seems to me that he needs to spend less time on what he wants, such as this health care jazz, and focus more time on the needs of the American people. If half of the money that is being used to help do this and that, were put into the hands of the people, we ourselves, with no help from the government and so on and so forth, would be able to pull ourselves up by our bootstraps and continue forth making our own way instead of this nail biting chaos that continues day in and day out.

  54. January 8, 2010 at 02:02

    In times of crisis,when in dire straits,we look for a “friend in need”.Just as Abu Dhabi gave Dubai US$10 Billion ,the Icelanders too accepted with glee, I suppose,
    the bailout-In the circumstances they are obliged to pay.Why hold a Referendum when you are obliged to pay? beats me the way they think-very illogical

  55. 74 T
    January 8, 2010 at 05:42

    The reverberations are spreading worldwide.

    If you want to know more about the effects of personal debt, do a search on Steve Keen (a prof. at the Univ. of Western Sydney in Australia).

  56. 75 Sumera Ashraf
    January 8, 2010 at 10:17

    I think Bailout cannot work because they have not fixed the underlying the problem.

  57. 76 M
    January 10, 2010 at 05:03

    All of these problems are caused by Greed. Greed of the wealthy. Has anyone not picked up on the fact that the powers that be want us to spend our hard earned cash, which in turn make the wealthy wealthier, but god forbid if we spend too much interest rates rise, which also benefits the people wealthy enough to have money invested. The greed will work the same as in a lot of older countries, and eventually make Australia third world. When this happens, I am sure the Indians will return to India, and the chinese to China as the prediction is they will be the next Super Powers, and we are giving them the helping hand.

  58. 77 Halima
    January 10, 2010 at 13:43

    No. They did not and will not work (apart from the worries of the mega rich)
    they do nothing to correct the underlying problems.
    The assumption that somehow if markets are unregulated and “free” that a natural balance will happen is just plain silly. It has become a market for the strong, – Chomsky’s description of “socialism for the rich” certainly rings true.
    We are missing a great opportunity to correct the system – and look at underlying value structures.
    I predict more of the same in the future, the rich will get richer and the poor will get further left behind and social institutions will crumble. And I am an optimist.

  59. January 10, 2010 at 15:37

    A sticking plaster can only cure a graze not an open wound.

  60. 79 Duane
    February 3, 2010 at 03:54

    All I no is that I had a 2200 squire foot home.I physically built a small trucking company that I employed ten people. Now I live in a 26 foot RV stay where I can Before I am kicked out.House financed up on a prayer this would be over now down to less than $300 Dollars.Every one is all talk and no act-sheen the bank owns us and our Government seance 1913! The red coats have won after all!!!


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