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OK. Lets just say we went the route of letting the chips fall as they may.
At a guess? We'd be at 15% employment right now, and reaching a bottom of the great depression. The recovery would take time, but be stronger in the long run then our current one. A little sub par on average, but with less levels of recession/recovery.
Longer term consequences unrelated to the economy however would be of great concern.
Only 15% would be optimistic. Letting the biggest companies and banks go under would have resulted in a domino effect that would have led to many other companies going under as well, even the ones that were run responsibly. Now there's room to Monday morning quarterback whether or not these companies should have been nationalized and then sold off/restructured instead of bailed-out. But only someone who just wants to watch the world burn would advocate letting them go bust.
Now where are the supposedly fiscal conservatives presidential candidates calling for these companies to be broken-up?
1929 Gov't did nothing and ten years of stagnation only ended by WW2
2008 Gov't intervened mightily and stagnation for perhaps 3 years and a rebounce. I only say 3 years because my industry, CPG did very well in 2011+. 2008 and 2009 were crazy scary.
Let's say in 2008, the government decided to let the chips fall where they may. They let Fannie and Freddie fail. They let GM go bankrupt and they let Bank of America fail along with AIG and Citigroup. Let's say there were no bailouts. What do you think would have happened to the economy? Would our country have been able to recover? Would it have been as bad as the Great Depression or worse?
We would not be facing another, worse recession or depression.
Didn't your mother ever tell you that if you ignore or delay addressing a problem, it only magnifies and makes the situation worse down the road?
Let's say in 2008, the government decided to let the chips fall where they may. They let Fannie and Freddie fail. They let GM go bankrupt and they let Bank of America fail along with AIG and Citigroup. Let's say there were no bailouts. What do you think would have happened to the economy? Would our country have been able to recover? Would it have been as bad as the Great Depression or worse?
It would have been Great Depression part II.
It was bad enough with all the bailouts. Even today, eight years later, we're still feeling the hangover. Yet one political party (the one that caused it) wants to go straight back to the tax cuts/trickle-down/deregulation policy that was behind the crisis.
1929 Gov't did nothing and ten years of stagnation only ended by WW2
2008 Gov't intervened mightily and stagnation for perhaps 3 years and a rebounce. I only say 3 years because my industry, CPG did very well in 2011+. 2008 and 2009 were crazy scary.
.................. and Yogi Berra said "It aint over 'till its over".
The 2008 financial meltdown is a problem deferred, not addressed.
Let's say in 2008, the government decided to let the chips fall where they may. They let Fannie and Freddie fail. They let GM go bankrupt and they let Bank of America fail along with AIG and Citigroup. Let's say there were no bailouts. What do you think would have happened to the economy? Would our country have been able to recover? Would it have been as bad as the Great Depression or worse?
I don't think it would be as bad as the 1930's because we had plenty of food and housing.
But it would have been very bad and very protracted compared to the reality.
And Europe too. The Fed had a huge stake in preserving their banks and financials. And Europe is a huge US trading partner, so a vicious cycle down the toilet for all...
With the Wall Street crash there wasn't anyone who could or would have been able to pick up the pieces of GM without the government stepping in.
This is true. Many don't like the manner of the BK settlement, but it happened about at the nadir of the crash. In more normal economic times I don't believe that GM would have been saved in any similar unconventional manner. It was the poor timing that pushed the effort, being very hard to ruin 1% of your GDP in one stroke.
With the Wall Street crash there wasn't anyone who could or would have been able to pick up the pieces of GM without the government stepping in.
Bankruptcy court is "the government stepping in"
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