sam04u said:
Wow. If anything, your post has to be the troll post in this thread. Do you honestly believe the government (whose money comes from the public) should be used to bail out private companies?
That makes no fucking sense.
Maybe not from a philosophical point of view, but when the alternative is complete turmoil in the financial system, it's a necessary evil. Should we stick to the philosophical point of view and avoid moral hazard, etc., or should we prevent a total meltdown which would most likely spread to the larger economy and cause a significant recession, if not depression.
I think the Fed should have assisted with the Lehman bailout, but we'll see how that turns out. I don't think it'll be as serious as what would have happened if Bear fell, since LEH's issues were known for longer and there was more opportunity to unwind exposure. However, it's still quite concerning.
IMO the Fed should seek to address the moral hazard issue with regulation - not the best solution, but I think it's better than letting firms fail.
BTW, I don't mean to be offensive or condescending to anyone reading the thread, but I would recommend that before making a judgment on bailout/non-bailout, you understand the nature of the businesses the firms are involved in. After all, the only reason that financial firms should be bailed out (IMO) is because of the counterparty risk created by a firm falling, but if you don't understand what the businesses are, you won't understand why counterparty risk is a big deal.
