Bailouts have several problems.
- They are biased in favour of big business, so the small competitors are disadvantaged
- Responsible competitors to the bailed out incompetent business have to pay for the bailed out business, which is unfair
- Bailouts support reckless lenders, managers and businesses
- Bailouts are usually bad value for money
- The bailed out business is receiving a government backing, which hurts the competitors.
- Bailouts tend to keep unproductive parts of a business going
- Governments tends not to run companies well in general ( Private sector are not perfect, but do better)
- If the company was viable a investment company would take over the assets of the bailed out company.
- They can be against the rules, or laws and given anyway
- Its bad for the economy
- You get what you pay for. If you pay companies for taking excessive risks, then a lot more companies will do so.
- The facilities can be put to better use if the company is not bailed out. And the bailout funds can be put to better use.
- When you prop up failing companies, you just entrench the bad management and practices which led to the companies failure.
- When you let the company go bankrupt, it doesn't mean the end of that industry, the assets just transfer to new management.
- Confidence is placed on politicians who just don't know.
- We can't borrow and spend forever.
- Bailouts, its not what you see, but what you don't see
- We don't advocate doing nothing we advocate sound policies, thats how would get out of the current situation.-
Rely on sound money
- You want prices structures to adjust
- We need to understand how the government got us into this mess
- Bailouts don't save mainstream, they stick it to main street
Too big to fail
- No company is too big to fail, some are too big to liquidate quickly.
- Government makes monopolies that grow too big.
- The market needs corrections, that is a natural function of the market, like getting a cold occasionally boosts your immune system
Structural changes to avoid bailouts
It would be nice if banks offered, at least, two basic types of account.
(1) Savings: Money does not earn interest but is safe, even if bank fails.
(2) Investment: Money earns interest but is at risk. If bank fails you become a creditor.
Jim Rogers on Bailouts
- The solvent take the assets off the insolvent
- Countries which took their pain came out best.
- Problem is too much debt, borrowing and consumption, governments solution is to borrow more consume more and more debt.
- The bailouts take the assets from the competent and give them to the incompetent.
McCotter on bailouts
"There are no necessary evils in the government"
Ron Paul on bailouts
- We can't create wealth out of the printing press
- You cant save free markets by socialism
- We have an immoral system, poor are bailing out the rich and innocent bailing out the guilty.
- Like a drug addict taking a fix and feeling better for a day, but the patient is going to die.
- Its arrogant that the politicians and bureaucrats believe they can plan the economy.
- Politicians are good at illusions
Peter Schiff on bailouts
- With capitalism, we don't prop up companies