Quote:
Originally Posted by Roflmao
I agree with what DG said, if what he is saying is the government is trying to do a little bit of damage control (I think thats what he is saying?). The housing market slump is sort of similar to the Great Depression in the idea that the carelessness of buyers and sellers caught up to the market itself, although it's not nearly a perfect storm scenario that the Great Depression was. From the few classes of economics I have taken, this is a natural flow of the market process. By the government giving money to the banks it aids them in damage control, which aids the entire market in damage control because the flow of money goes through the banks, and the more money they recieve backing from the government, the more they feel safe with lending and stimulating the economy with. Thats why the FDIC and all that wonderful stuff is in place.
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I agree with you and DGthe3,
I just feel it's important to note that when banks feel safe they make riskier loans (sub prime) and we do this all over again. My contention is the lending market would be much more stable, and reliable, if the Gov didn't bail out the banks every time they have to pay for taking on risky borrowers. If the banks were held accountable, the same way the rest of us are when we default on a loan, then the lending market would stabilize.
Somewhat related: Notice how they aren't bailing out the borrowers, they're bailing out the banks. But the media spin is they are taking care of
us by injecting the 200B... I don't think they should bail out either but what do I know.
