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 companies that got bailouts were huge financial institutions that the economy as a whole depends on. If these banks hold a large proportion of business’s and individual’s money then those businesses and individuals are going to be hurt by them going under. Especially considering that because banks operate on the model of fractional banking, all those parties are going to lose a lot of money by the banks going under. That is banks don’t actually have all of everyone’s money on hand to pay everyone out who holds accounts there. Those last two sentences aren’t exactly ELI5, but it’s an important concept.
This is the gist of it. There’s a lot more debate about the way things are, and there needing to be better safeguards, but that gets more involved and complicated.
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