> Undeath wrote:

> Haven't the past few years established that in this climate tax cuts aren't creating an increase in spending great enough to create the revenue needed?<<

Nope.  For one thing, taking people's profits in a recession will deepen the recession.  For another, federal spending is way way way way way way way way up.  Clearly federal spending isn't helping the economy recover, that's what I'm seeing.

hell. yeah.

> Genesis wrote:

> So what you're suggesting is back in 2008 the federal government should have just let all those insolvent banks go bankrupt right?

In 2004 the federal government should have stepped in, slapped the bankers who were handing out loans like candy, and then put them in timeout until they learned how to do their job X(

How much do you actually think the FDIC would have been able to cover out of people's deposits?

aahhhhh you're right! scream like a biiiiiitch! pay whatever it cossstttsssss!

aaaaaaaaahhh! do it agaaaainnn!!!

aaaaaahhhh! do it agaaaaaaiinn!!

let's figure it another way

68 million people worked BEFORE the recession

average wage, $26,000 / yr

interest on bank accounts : 1.0%

I doubt if even 0.01% had as much as $25,000 in a bank account -- or CD.   That kind of cash goes into IRAs which ARE NOT GUARANTEED.  Or municipal bonds.

shit fails

bankers go out of work

govt sets up new banks

banks decide not to suck

we'd have a bailout of PEOPLE and eliminate banks run by asshats.

instead the asshats are still there, those that didn't take a golden parachute, and the banks are like "Hmm, didn't realize it paid to fail a bank. Yumm. Muhahaha"

also, speaking as a bankruptcy paralegal, "wiped out by the recession" is pretty damn cozy

I didn't get wiped out and when I pay credit cards I wish I had been

Oh, here's some food for thought:

http://www.relbanks.com/top-us-banks/deposits

That is a list of the total amount of deposits each bank has, for comparison.  Now, these are 2011 numbers.  I'm still looking for numbers for 2008.  But they're just here to give perspective in what we're talking about in terms of deposits.  JP Morgan alone has over $1 trillion in deposits.  That is twice the cost of TARP.  And that money would have disappeared.  Bank of America: about the same.  $2 trillion saved.  Wells Fargo: another 800 billion+.  Citibank is literally the only bank with deposits over $500 billion that didn't need a bailout.

I would note, however, that it's likely the numbers were... about equal in size, because if there was a massive bank deposit pullout before TARP started being discussed, the banks would have already failed for reasons entirely separate from what TARP was trying to fix.

Now, banks are required to hold 10% of their deposits in reserve at any given time, so you get that.  However, those are gained on a first come-first serve basis.  So more than likely, the people who can pull their money out of a bank as soon as humanly possible (probably those who also have more than $100,000 and have a greater incentive to pull out their money from the bank since, unlike the regular guy, they aren't covered by the FDIC) would get to it first, so that doesn't help the FDIC very much.  Then whatever you think the FDIC can cover (although the FDIC was never meant to actually bail out everyone in the country).  Everything else, we're footing the bill.

Undeath,

The USA has a spending problem, not a revenue problem. We're already taxed ridiculously. We just spend even more ridiculously than that.

Cutting spending is easily sufficient. MOST of what our federal government does is entirely a waste, from bombing foreigners to operating 20-50 agencies domestically with overlapping functions (on top of managing them horribly).

"Haven't the past few years established that in this climate tax cuts aren't creating an increase in spending great enough to create the revenue needed?"

Nope. People don't spend so much based on temporary tax cuts; they know they have to prepare for the coming hikes, and keeping extra capital on hand is a buffer against insolvency.

This is basic economics. Taxes harm the entire economy. Business people aren't idiots: Given a one-time tax-cut in hard times with leaders pushing to make them harder times [via higher taxes], they understand the security in saving and how foolish it would be to spend that money immediately. They're not blind or dumb. That tax cut isn't not taken from them in a vacuum. They know they might need to keep it on hand. It's just being responsible. It could save their businesses and millions of jobs across the nation.

Genesis,

"So what you're suggesting is back in 2008 the federal government should have just let all those insolvent banks go bankrupt right?"

If only.

Undeath,

"In 2004 the federal government should have stepped in, slapped the bankers who were handing out loans like candy, and then put them in timeout until they learned how to do their job "

The federal government is why they handed out loans like candy. They mandated certain lending practices and, more importantly, the Federal Reserve made money (lending) ridiculously cheap. The federal government (via the Federal Reserve) created the bubble, not banks.

I Like Trains kid,

"If 4,750,000 people had bank accounts of $100,000 or more that would have been lost, the FDIC would have had to spend the same amount of money as TARP did."

Yet it wouldn't have exerted a crony force into the market, rewarding inept bankers with free cash and depriving competent, intelligent, responsible bankers of the business that the inept bankers would have lost in a free market. There's more than just costs of insurance to consider; there's costs to the breaking the free enterprise system and the wealth it creates/protects.

"But... you're just playing with fire here, to suggest that the entire banking system should have systematically collapsed just as a way to say screw you to people who mismanage their funds."

There's no malice in wanting to protect the free market which enriches us all. There's no malice in wanting to protect our children from continued massive inflation which continually robs us all of what we work for.

I literally don't know anyone with more than $100,000 in a bank account. That'd be a waste of money. How many people really had that much money just sitting idle in banks? I have no way to guess, because that would be foolish and I know literally no one who leaves that much money idle for more than a small minority of the time.

The FDIC already has the full backing of the federal government. Everyone knows there'd be no hesitation to print all of the funds necessary to carry out its functions. We print trillions just to give it away to bankers. Printing to cover FDIC insurance would hardly be contentious.

Not all banks failed. There were plenty of banks run by competent people who would have loved the new business of people escaping failed banks. Failing banks is a necessary part of free markets which benefit everyone. They're part of a process which improves all banks, because the inept, wasteful, and failing were removed from the herd. The FDIC exists to protect people from unmitigated harm in this process.

Does it matter?

Nobody would consult me any more than they did to print trillions to cover their bailouts this decade. It would be printed and we would all pay the costs in inflation, just as we're doing now.

The difference is that what they did short-circuits the free market and inept banking failures continue to do business in the industry. What I would have preferred would have rewarded successful, competent bankers with more business and forced the losers to find other work which they could actually perform.

The integrity of the free market would have been worth, at the very least, the same amount it cost us to damage it.

The focus should be on the government policies which caused the bubble and crash. Without these policies the FDIC wouldn't have been on the hook for so much money and we wouldn't need to ask ourselves how much to spend on FDIC obligations. We don't know how much the FDIC would have been on the hook for, so conjecture is evidence of nothing.

The point is that government policies, meddling, and theft caused cheap money, the bubble, and the crash. More government interference with free markets was hardly a solution to a problem caused by government interference to begin with.

It's like wasting money on the auto-bailouts. We lost money and we didn't help the industry. They're going broke again. And all of our money is worth less for propping them up for a couple of years.

The same thing happens with banking. Not only do we lose the money, but we damage the productivity of the system itself, causing the loss of even more wealth.

I haven't even gotten yet into the long term economic repercussions.

Would love to hear (see) it!