Were the bailouts a good idea?

[bascule]

A little more than a year ago, governments and central banks around the world acted to prevent what they foresaw as a global financial meltdown, originating the the US following the collapse of Lehman Brothers. The financial institution folded holding a record $613,000,000,000 in debt. This figure eclipses the GDP of all but the 17 highest producing nations. Lehman Brothers' collapse sent markets around the world into panic mode.

 

Government bailouts took the form of extensive loans to these institutions, often at 0% interest, and in some cases buying failing financial firms outright. The bailouts ended up costing the taxpayers of these respective nations huge amounts of money. Estimates place the net costs of America's Trouble Asset Relief Program at $159,000,000,000.

 

Looking back on the bailout, some people, such as myself, say "disaster averted." Others feel the bailouts weren't worth it, and may have made the situation even worse.

 

What do you think? What would the world be like if governments hadn't passed bailout bills and simply let the market take its course? Would we better or worse off?

Edited October 22, 2009 by bascule

[iNow]

I say, yes... absolutely. Our brains are probably too limited to understand the real world impact which would have occurred had we allowed the markets to "self-correct." The bailouts were greatly necessary, and helped tremendously. Without them, we'd have a great many people making fence post soup.

 

I say this with a caveat, though. We're not really doing anything now to add regulations, and we're losing the opportunity to do so. We could do this all over... yet again... if we don't learn from our previous mistakes.