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Bailouts


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

Solutions

  • We don't advocate doing nothing we advocate sound policies, thats how would get out of the current situation.-
    Reform system
    Lower taxes
    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

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.

Jim Rogers talks about bailouts

  • The bailouts take the assets from the competent and give them to the incompetent.

McCotter on bailouts

McCotter on bailout legislation

"There are no necessary evils in the government"

Ron Paul on bailouts

Ron Paul on Bailouts

  • We can't create wealth out of the printing press
  • You cant save free markets by socialism

Ron Paul speaks out on Bailout adjustments


  • 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

Peter Schiff on bailouts


  • With capitalism, we don't prop up companies

Reference

Sources

Links

Link42Cyprus bailout terms - (Bailout graph at the bottom right of the page. - since removed)
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