Didn’t some of these companies cause the crash? Or at least help it. Feels kind of unfair that they get off scot-free.
What would have happened if the government didn’t bail them out? Would we ever recover?
In: Economics
the alternative would have been less taxes and more unemployment payments and spread of fear the could undermine more people, companies, governments, etc and make it harder for politicians to get elected
if general motors or Greece goes bankrupt then lenders will fear more likely usa goes bankrupt. so bond rates on usa debt might go up 1%+ a year. 1% a year on 10 trillion dollars (federal debt) is 100 billion dollars every year. on top of federal, are state, city, and public entities like new York city transit.
bond rates go up, deficit goes up, which makes financial shape look even worse and bond rates go up even more.
2008 was before the modern economic Era where countries hopelessly in debt could find people willing to loan money for close to rate of inflation… the bailouts helped inspire the modern “too big to fail and everything else will collapse at same time so who cares” thinking…
Greece bond rates for example climbed to 10% and briefly to 50% but then down to near zero… while Greece keeps getting in worse financial shape thanks to confidence in too big to fail. https://commons.m.wikimedia.org/wiki/File:Greek_bonds.webp
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