Two perspectives on the subprime mortgage crisis

[ecoli]

the point of a society should, imo, be that we all look out for one-another; if loads of people, through no fault of their own, would have lost their pensions etc then i think it's right that everyone help them out with their tax money. it'll probably be them paying a little extra in tax, but it could be them being saved, so it's more-or-less a national insurance scheme.

 

also, as i understand it, stabalising the bank stabalised the economy, and the economy taking a beating would have been bad for us all.

you're touching on a deeper issue here... and that is, should the taxpayers be responsible for bailing out insolvent companies? It's bigger than 'helping each other out' in a society. Why should we spend millions bailing out a company that may fail anyway?

[Dak]

the uk situation with northern rock is a bit different (afaict) from the US one.

 

the uk gov' didn't bail-out the company -- it nationalised the company in order to bail out the customers. the company would undoubtably have fallen without it, leaving all the customers with their savings and pensions evaperated.

 

whereas i still don't understand why the US banks need bailing out atall?

 

(as an aside, i think that normal 'bail-outs' are high-interest loans from the bank of england, so that companies get bailed out, the gov' make money, and the companies learn not to rely on free hand-outs from the gov').

[Pangloss]

the uk gov' didn't bail-out the company -- it nationalised the company in order to bail out the customers. the company would undoubtably have fallen without it, leaving all the customers with their savings and pensions evaperated.

 

I wonder where the WTO sits on that distinction. It's an interesting way around free trade disputes. Bailing out a bank is a pretty gray distinction from funding a nationalized industry.

 

It'd be interesting to compare that with the difference between US complaints against Europe for Airbus vs Europe's complaints against the US for its tax breaks for Boeing.