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The Register has a eminently readable explanation of why big banks are considered too big to fail, and get government bailouts after mismanaging their financial situations.
We seem to rage every time this happens, Let them go Bankrupt! seems the cry from the man in the street.
But that is a juvenile approach which will hurt far more people than those few officers miss-managing the bank or its funds. Banks don't have funds. Its all your funds. And if the bank fails, you mostly get nothing.
The article explains just what banks are (for those of you who slept through Econ 101), and what they are not. Its worth a read! And don't skip the comments section on the article. Many posters had no problem with bailing out the banks, but railed against bank management officers who rarely or never face any serious charges.
When you look at it this way, the federal "Stress Tests", and Forced Closures (over 500 since 1998) imposed on US banks, large and small, was the right course of action when combine with holding our collecting noses and bailing out the big ones.
Its too bad the stress tests, measuring a bank's ability to withstand withdrawals, loan defaults, and deposit slow-downs from unemployed depositors, weren't imposed far earlier. Local and national Banks have learned at least part of the lesson, and are closing money losing branches at a record rate, in favor of ATMs and digital services.
(Score: 2, Insightful) by Anonymous Coward on Monday May 18 2015, @10:02AM
risk is a critical feature of capitalism. without it you don't really have capitalism at all, which seems to be what confuses many socialists who think that "the greedy capitalists" take all the profits and none of the risk, when in fact its their beloved government that is transferring the risk from their cronies to the taxpayer
there is nothing capitalistic about what happened in 2008. in fact real capitalists like peter schiff and ron paul predicted the collapse and consequences years in advance, despite being repeatedly ridiculed on national finance news programs
the rage expressed by the occupy wall street movement should have been directed at washington, who were the ones that voted in favor of the bailouts
meanwhile, the real capitalists on main street who keep the country afloat and people employed (and pay the most taxes) are screwed to the wall by big government red tape and lack of available capital
when government puts its grubby fingers in capitalism it starts turning into socialism, which in turn leads to corruption and economic ruin. combine that with the failed economic theories of john maynard keynes and you have the divided states of amerika of today that socialists can't get enough of
(Score: 5, Insightful) by Anonymous Coward on Monday May 18 2015, @10:17AM
Ah yes, everything is socialism's fault. Wall Street siphons billions of dollars out of everyone's pockets? Socialism! It makes perfect sense. Thanks for enlightening us AC, I'm sure glad you're not a fucking idiot or anything.
(Score: 2, Insightful) by Anonymous Coward on Monday May 18 2015, @10:25AM
apple siphens billions of dollars out of everyone's pockets too. that aint socialism, cos everyone is willingly giving their money to apple so they can get a crummy piece of hardware in return
when governments bail out banks they forcefully take taxpayer money and give it to their crony campaign contributors. that's not capitalism, that's is socialism at its most corrupt
i really can't understand how such a simple concept goes over your head
(Score: 1, Insightful) by Anonymous Coward on Monday May 18 2015, @01:43PM
Socialism would be if that taxpayer money was used for services or infrastructure that benefit the people.
A corrupt government handing taxpayer money to corrupt bankers is "socialism" in the same way that a crooked apple store employee giving you the keys to his workplace so you can steal all the crummy hardware and sell it on ebay is "capitalism".
Oblig 2008 crash link: http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 [rollingstone.com]
(Score: 2) by BK on Monday May 18 2015, @03:14PM
So it's Socialism when it's OK and "something else" when you don't like it.
When the government bails out banks "for the public's good", it's still Socialism even if they're all corrupt liars.
...but you HAVE heard of me.
(Score: 0) by Anonymous Coward on Monday May 18 2015, @08:49PM
Crony capitalism is not socialism, no matter how much you try to conflate them.
(Score: 2) by FatPhil on Monday May 18 2015, @02:21PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 3, Insightful) by curunir_wolf on Monday May 18 2015, @03:13PM
The problem is corporatism, but corporatism is simply a flavour of capitalism.
Actually, it's more accurately a perversion of capitalism. In fact, it's closer to Mussolini-style Fascism than it is to capitalism.
I am a crackpot
(Score: 0) by Anonymous Coward on Monday May 18 2015, @08:46PM
Perversion or not, its still capitalism.
(Score: 2) by mtrycz on Monday May 18 2015, @02:33PM
No, that is simply corrupt capitalism. You're making things up.
In capitalist America, ads view YOU!
(Score: 0) by Anonymous Coward on Monday May 18 2015, @10:08PM
corrupted by government... which is socialist
(Score: 0) by Anonymous Coward on Monday May 18 2015, @11:56PM
Is proof by repeated assertion the only argument you can make?
(Score: 2) by Tork on Monday May 18 2015, @05:45PM
.... meanwhile, the real capitalists on main street who keep the country afloat and people employed (and pay the most taxes) ...
None of which they do willingly.
🏳️🌈 Proud Ally 🏳️🌈
(Score: 3, Funny) by jmorris on Monday May 18 2015, @06:48PM
None of which they do willingly.
That is kinda the core insight behind capitalism. That each person, doing what they do out of pure self interest will, if all trade is kept voluntary, create a society where all benefit through the magic invisible hand of the marketplace. And when it is allowed to work it does, in spades! Nothing else comes close to creating wealth for a society than capitalism. But because ignorance is rampant it is always hated and regulated until it dies off and the society falls back into mans' natural state of misery.
(Score: 2) by Tork on Monday May 18 2015, @07:00PM
🏳️🌈 Proud Ally 🏳️🌈
(Score: 0) by Anonymous Coward on Monday May 18 2015, @08:54PM
And reality proves that that's nothing but a crock of shit. Nobody benefits in capitalism except those with all the capital, who do nothing but use it to hoard even more capital for themselves. Thats how it works in reality. Ignoring the evidence in favor of dogma that isn't supported by facts puts it straight into the territory of religion.
[Citation Needed]
(Score: 2) by K_benzoate on Tuesday May 19 2015, @05:24AM
That sort of capitalism made sense back when acquiring capital could be little harder than walking a few miles over the horizon and simply claiming a some dozen acres of productive land. Capital, land and natural resources, were just there for anyone to claim and make use of. Now, everything and everywhere is owned by someone and if you weren't lucky enough to be born with some endowment you have only one thing to sell to earn your living: your labor. Human labor, even for educated people, is quickly becoming obsolete. We already have more people than we could ever possibly put to work doing anything useful or necessary. Not everyone can be trained for high-level theoretical work. Not everyone is talented enough to be a worthwhile artist. What are they to do now that rent is charged for use of every square meter of Earth's available land?
Capitalism has absolutely no acceptable end-game for dealing with these billions of people. If you just let things play out according to the laws which naturally obtain the results are horrifying and predictable: grinding poverty increasing in scope and scale, violence, loss of life and property.
Call me a dreamer but I think civilization can do better than a death march into capitalist Gotterdammerung.
Climate change is real and primarily caused by human activity.
(Score: 0) by Anonymous Coward on Monday May 18 2015, @08:44PM
Your fallacy is obvious. [yourlogicalfallacyis.com]