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Imagine its fall 2008. Lehman has collapsed, but there was no TARP. There was also no Obama Stimulus package in the months following, and no QE1 or QE2. The free market was allowed to run its course. How would our economy look now? Would there have been a real bottom followed by a recovery? Or would there have been a full economic collapse dwarfing that of 1929?
A lot of people would have lost jobs. It would have taken longer to come out of it. Fine, you and I can make it through a 5 year low off of our savings, but there are people who were living paycheck to paycheck that will have to turn to crime in order to survive. In the end, everyone would be affected.
The economy is still low. Try to take advantage of low interest rates.
The free market would have functioned as it was intended.
We would have had a quick efficient bottom where the banks and Wall St. would have lost trillions due to their poor decisions, and smart innovative people would have taken their rightful places as industry leaders. People would have learned the lessons of misusing leverage.
We would now be on course for a real recovery, and job growth, instead of mired in the endless sea of debt and corruption, and incompetence we are in now.
We have solved nothing, we have kicked the can down the road and our debt load is effectively marking the end of the road.
We could have just ended up in a depression and been maybe worse than japan for 25 years or so.
then we can all be poor together. many here would just love to see that happen.
We can speculate all we want. It will do us no good. The fact of the matter is that a theoretical scenario as the OP stated will always be just that: hypothetical and never allowed to transpire.
Remember. Big Banks and Wall Street never take haircuts or losses. That's what the taxpayers are for. Since said banks buy the "leaders", who in turn have a vested interest in doing what they are told so as to remain in power, are only too happy to rig the game. As such, the Big Banks are in the unique position to where they can, in effect, hold you for ransom: if they go down, you go down with them. The difference is: they can last a heck of a lot longer. I saw 'Titanic' several times and the outcome was the same. The ship sank every time. And the First Class passengers were the first, and for the most part, only ones to make it to the lifeboats. That's how life works. The ones with wealth and/or influence are better and will be the ones chosen for safety. The dollar ALWAYS trumps prinicple. The dude from Spirit Airlines was totally correct: no matter how bad you think the service was, you'll still be back next time they can save you a buck. He's right. That's how we are. I mean seriously. Who needs the banks? Every one of you do. Forget credit and investments for a second. Is anyone really naiive enough to think that Americans en masse are prepared to give up their credit cards and debit cards and online bill pays and revert to a world of cash and checks where you need to not only see an in-person teller, but make the bank before 5PM? Seriously? Not-a-chance.
You need the banks. The banks don't need you. As far as kicking the proverbial can down the road, when we catch up to it, we'll kick it down the road again. And again. And again.
Complain about it on message forums all you want if it makes you feel better. Nothing is going to change.
We'd probably be in a mini-Depression, not as severe as the Great Depression but in worse shape than the actual recession that followed (think unemployment rate in the low to mid teens.) Following that would be drastic restructuring of the economy, very low inflation, and a strong recovery (akin to the 1982 - 2000 bull market.)
The free market would have functioned as it was intended.
We would have had a quick efficient bottom where the banks and Wall St. would have lost trillions due to their poor decisions, and smart innovative people would have taken their rightful places as industry leaders. People would have learned the lessons of misusing leverage.
We would now be on course for a real recovery, and job growth, instead of mired in the endless sea of debt and corruption, and incompetence we are in now.
We have solved nothing, we have kicked the can down the road and our debt load is effectively marking the end of the road.
I agree. Initially it would have been quite bad, but other banks would have risen to the top (the ones that actually were smart) and we wouldn't have now 4 or 5 banks who are bigger than before. Yes, it would have really tough for a few years, but right now we decided to stick a band-aid over a bullethole.
we would be better off if the government would have stayed out of it. we are on borrowed time right now and the more we push off the hard decisions, the bigger the train thats going to hit us will be.
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