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 modern economic system is build like a house of cards. These companies were cards on the very bottom of the house. Do you wanna risk pulling them out? Well, for some we did. And it didn’t look good for our house afterwards, so we let the others stay put, even if it seems like a bad idea on first glance.
When large companies or financial institutions are about to go under, the ramifications are significant. Hundreds or thousands of people may lose their job, entire industries may be disrupted, the economy may take an even larger hit than it already is taking. Bailouts are not free money, they’re emergency loans. Giving them those loans allow them to stabilise and recover, which may sound unfair as it’s not a benefit afforded to every average person but typically it’s the best course of action for everyone involved. Don’t just think of rich execs getting a get out of jail free card. Think of the employees or people working in a sector that might be hit hard with a domino effect if a large company goes under. Financial institutions create even more problems, since becoming unable to fullfill their financial obligations can be catastrophic for people whose money is tied up to them or have loans with them.
If you owe $1 Million, its your problem (to repay).
If you owe $10 Trillion, its everybody’s problem.
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