Quote:
Originally Posted by Adder
Yes, the failure in your analysis is in appreciating that banks are different from other businesses.
And, in fact, the fact that they paid all that money back with interest at least somewhat undermines the argument that they were all failed businesses. Turns out those assets weren't all completely worthless after all.
But they were eaten by their betters. There's no more Wachovia, Washington Mutual and a bunch of others. Much more so than other industries, failed banks get literally taken over by other banks that aren't failing.
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1. Banks are not different than other businesses. We protected GM and AIG for the same reason we did banks. TBTF.
2. The assets only recovered value because we propped them up with accommodating monetary policy and direct purchases of MBS.
3. Businesses can have all the assets in the world, but if they can’t liquidate them to cover operations and no one will lend to them, They Go Under. Bear Stearns and Lehman were also holding assets which eventually recovered value later (somewhat). But they got caught in a cash crunch.
If you can’t fund operations and the market deems you untrustworthy and thinks it’s preferable to watch you die, you are failed. Those are failed banks. Almost all of them. They exist by grace of the taxpayer. They are, in the deepest Trump accent, truly (unlike most of his targets for the insult), Losers.
Wachovia, WAMU, Bear, and Lehman are at least honorable losers. They went down. Goldman begged Uncle Henry for an 80 cents on the dollar payout using AIG as the stealth delivery method. That’s crony capitalism at its worst. I’d have done the same, as would you, but I’d like think we’d both admit to our skullduggery. Not Goldman. They’re entitled and unashamed, the ultimate “welfare mothers” of Wall Street.
