In a perfect world, companies that received bail out money would have the necessary funds to maintain employees and hire more which would increase other commerce.
But these suckas are hoarding the money! Banks got bailout money...deposited it....and just holding it like it's rainy day money in a sunshine economy. Greedy suckas.
this does sort of simplify things quite a bit.
the argument for the bailouts was never about job creation and net worth erosion (at least primarily). The argument was that a collapse of a major global bank like Citibank or BOA or an insurer like AIG --- the biggest in the world, would have a tremendous ripple effect across the world, essentially shutting down major trading because people were too spooked and panicked and sending the world into a global depression.
What the bailouts were designed to do was to infuse the banks with capital, and keep them afloat long enough for the housing market --- on which so much of their health rests --- to bottom out. the banks would have unloaded all their crappy assets and be stable when the economy starts to bounce back.
That said, it's too soon to tell if all this is working, and the banks haven't been clear as to what they've done with the money. But letting the banks fail just wasn't an option. And yeah, that sucks, because the people who put the financial institutions in these positions deserve their comeuppance. But at the cost of a global catastrophe? That's a hard argument to make.
Commenting by HaloScan
