Bailout 14: Possible Solution

A solution that is MUCH fairer that has a MUCH better chance of working!

Category:

Education

Tags:

• bailout
• paulson
• bank
• bernanke
• credit
• crisis

[smallbighorn]

wow, destroy the banking system and let every company who owns credit default swaps go out to. You would destroy every hedge fund in the country! My god! wait where did I hear this logic before? Oh, I know! Andrew Mellon, the man who lead the country through the great depression because he let the banks fail! Your logic is clearly unthought out, and plain wrong. Thank G-d you have no standing in the real world.

[khanacademy]

this plan does not advocate "destroying" the banking system. It advocates seeding new instituions to take up the economic role of the banks (since they are refusing to do it). The credit default swaps can be attempted to be cleared in government-run clearing house. The bottom line is that if the current banks survive but never lend (like Japan) we are in for a LONG crisis (see my appearance on CNN and the attached paper for more information).

[emilianopickett]

The real thing Sal is forgetting is that 'too big to fail' really means that certain shareholders of certain banks are too important to lose their investments.

If the Sal/Todd plan were put into effect, many of the existing financial institutions would go belly up. But who are the shareholders--Saudi princes, congressmen, senators, etc.

This is the sad reason Sal/Todd's plan will never see the light of day.

[aveenPulimi]

The culprits in this whole recession are the rating agencies. They are the only companies that haven't felt the brunt of recession and have profited. They haven't done their jobs correctly. Regulating these rating agencies would be a better choice to avoid these disasters in future.

[voutasaurus]

@khanacademy: Do you think that the US government would still have a AAA rating if they did this instead of absorbing hundreds of billions of dollars in bad assets?

[tIs4gatorbait]

@tnekkc Wrong. Very smart people can make mistakes or say silly things but that doesn't make them entirely stupid. Sal makes mistakes on things in his videos all the time but he's not dumb because of it.

[tnekkc]

@tIs4gatorbait

Comments are not stupid, people are.

That is why you are gator bait.

[tIs4gatorbait]

Sal you aren't teaching anymore, at least in this playlist. You keep bringing things up like something that happened in Japan, Fannie Mae/Freddie Mac, "too big to fail". I don't know anything about these, as I am trying to learn something I previously knew nothing about. 

[tIs4gatorbait]

@tnekkc What a stupid comment

[tnekkc]

The worst idea in the history of the earth, large scale collectivism, is based on the idea of being more fair.

Hitler was the only politician for the little guy. He wanted it to be more fair.

Stalin was the only politician for the little guy. He wanted it to be more fair.

Mao was the only politician for the little guy. He wanted it to be more fair.

Pol Pot was the only politician for the little guy. He wanted it to be more fair.

FDR kept the economy in the toilet, through fairness.