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Did the Government Bailouts Work & at What Cost? | The Big Picture

September 12, 2012 Leave a comment Go to comments

Did the taxpayers get their money back? is the wrong question. There were many costs, past and ongoing, that the economy had to bear to pursue these rescue plans. The taxpayer (aka the US government) assumed a tremendous amount of risk, provided bailout funds at a time when NO ONE ELSE ON EARTH WOULD OR COULD, created an enormous moral hazard, and rescued bond holders — at 100 cents on the dollar — when they did not deserve any such rescue in a capitalistic system.

By most measures, the Bailouts did stabilize the system, and prevented another Great Depression (so far). I do not think any fair minded critic will disagree about that. However, there are legitimate criticisms of the societal costs of these bailouts, about the collateral damage that it wrought. We still have an ongoing propping up of banks, ZIRP, and other lingering effects.

By the numbers, ProPublica informs us that taxpayers are still owed $27 billion for GM, $2.3 billion for AIG, $91 billion for Fannie, $51 billion for Freddie. While some people point to a net gain of $19 billion for the Wall Street bailouts, you can only reach that number by ignoring the nearly $200 billion that is still owed.  (See Pro Publica for more info)

All of these areas are ripe for greater exposition. Look for more on the full costs of the bailouts later this week . . .

via Did the Government Bailouts Work & at What Cost? | The Big Picture.

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