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I’m taking a Online cash advance and I will stop complaining. But many people are complaining about the bank bailouts and it’s easy to understand why. In a capitalist society, the strong survive and the weak collapse. A bailout, in many respects, is a reward for failure. “Your bank didn’t quite make it? Never mind, here’s five hundred million dollars to help you.”
Are bailouts necessary?
In the situation we are finding ourselves, that bailout is running in circles around the bottom of the barrel, and we don’t really have a choice. We have to do whatever will fix things and ensure the country’s future prosperity. And right now that means bailing out the banks and stimulating the economy.
U.S. – the home of Capitalism
Capitalism generally works well but it has its blind spots. It makes the bank executives take risks in order to build bonuses. They don’t care about systemic risks and often they don’t care about their own shareholders. So, regulation is necessary to reduce risk.
Unfortunately, our regulators dislike regulation, and last year the resulting crisis drove the banking system to the brink of collapse.
Talking of collapse…
Of the big five U.S. investment banks, only Morgan Stanley and Goldman Sachs are still standing, while Lehman, Bear Stearns and Merrill Lynch have all been buried.
Take a look at the big retail banks. Citigroup stock fell from over $50 to under $5 per share despite huge cash bailouts, and Bank of America is going the same way. Wachovia, the fourth-biggest bank, was acquired. Washington Mutual, once the sixth-biggest, became the biggest failure in U.S. banking history.
You have to think carefully about where you are going to apply for a Online cash advance
Let’s play dominoes – the bank goes first
If the banks go under, there will be huge problems, because our whole economic system runs oncredit. Most small companies use lines of credits in their businesses. Most large companies rely on sales of commercial paper. If that money is unavailable because the banks have folded, many solid businesses will go under because of liquidity issues.
What happens when the farmers, truckers, and other businesses, the backbone of our infrastructure, fail? Will there still be food on the supermarket shelves?
The New Deal
Actually, in the Great Depression between 1929 and 1933, about one in five banks folded. These bank failures took a massive toll on the economy, with real GDP falling by 29% and unemployment hitting 25%.
That’s when President Franklin Roosevelt stepped in with a plan called the “New Deal.” He shut down the banks and allowed only sound banks to reopen. This restored confidence in the banking systemand Roosevelt went on to focus on employment through public works projects and agricultural programs.
Let’s be optimistic
Warren Buffett knows this history, and that’s probably why he said that the bank bailout was “absolutely necessary to avoid going over the precipice.” Now he’s confident that America will bounce back.
So the bank gets the bail-out…
…and I get the Online cash advance. I hope this will make the banks as happy as the Online cash advance makes me.
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