Perhaps we didn't bailout the banks in 2008.

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#1 Posted by Jebus213 (10011 posts) -

They would have declared bankruptcy, and sold all of their good assets to the highest bidder, which would be dramatically cheap. This is the real way to redistribute the wealth.

The FDIC would have bailed out every person that had up to $250,000 in their bank account. Many people who defaulted on their mortgages would have had their homes seized by the banks and sold at, again, dramatically reduced pricing. This would have enabled all sorts of poor people to purchase houses. As a whole, real estate prices would have fallen around the country, which is good because prices would reflect value.

The market share that was formerly cornered by the banks like Citi and Bank of America would have been opened up to all sorts of smaller businesses who were solvent.

AIG would have plummeted, sold off all their valuable assets at reduced pricing, and small, solvent insurance companies would have taken over those assets, giving small mom and pop businesses a much greater share of the market. These small businesses would need more employees and they would hire those who lost their jobs at AIG.

The American taxpayers would be on the hook for 2 trillion dollars less, which amounts to about $7000 for every man, woman, and child in the country.

Fannie and Freddie would have crumbled, and the government would repeal the legislation in the CRA that required lenders to give balloon mortgages to unqualified people. They too would have sold all of their good mortgage-backed securities to small businesses.

GM would crumble and all of the UAWs that are unwilling to concede pay or benefits would lose their jobs and have neither. They would be able to find other jobs in the same small businesses that would buy up all of the good assets of GM.

The Federal Reserve would not be printing money (well- as much money) like crazy and the value of the dollar would not be threatened from massive inflation in a year or two. Right now, the velocity of money would not have slowed down so much that it causes the deflation we have.

Basically, it would have been a great big sale on all sorts of assets, and investors and small business owners would be shopping for the cheap goods instead of hoarding their money and firing workers.

There would still have been a severe recession, but the duration of it would have been months, instead of years that we are looking forward to right now. We certainly wouldn't owe China, Japan, and Saudi Arabia money.

Perhaps the amplitude of the recession would have been worse but it would have never lasted as long.

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#2 Posted by Jebus213 (10011 posts) -

and when I don't troll.....