What if there was no bailout?

[Christophercarl]

What would happen if the government decided to do nothing and let the big banks, auto industry, etc. fail? Obviously things would get real ugly for a while, but would we end up better off in the long-run?

[Goldy1]

WE are living in dangerous times my freind lol. I do not know. Houses worth almost nothing? Everyone on public assistance? They say a main factor is unemployment. No one can buy anything w/o jobs b/c 2/3 of our economy is from consumer spending I read.
Just keep working your job so we can keep the bailouts coming I guess.

[Goldy1]

I am neutral on the bailout, but like everyone I ask how does it affect me? I do not know the answer. My opinions on the big 3 stand before and after bailout.

[maat55]

I don't think anyone knows for sure. If put into a desperate situation, the workers and management would probable find an equitable solution quickly. Bailouts are nothing but an duck tape short-term approach with no lasting solution.

[Broken Arrow]

Well, the Great Depression in the early '30s is probably a good example of what can happen when not much is done to help stabilize an ailing economy. To be sure, our free market economy is very resilient, and it was able to bounce back from even that. But at what cost?

I don't really know if we would be better off without government intervention. Personally, I believe that we are best off when the government does what it can to ensure the stability of the economy. Sometimes, that does mean getting involved (such as insisting better transparency and regulatory oversight against corruption for example). Other times, it means literally having their hands off and letting rotting companies fall where they may. I suppose the great trick is in knowing what to do depending on the situation at hand.

Still, the Great Depression resulted in large part because the government leading up to it had a very Lassez-Faire approach to the market. Fortunately for us, our government is being very aggressive and proactive about it. Sure, I think we can all agree that we're in a recession, but at least I don't think we're in a depression....

[rooskers]

Lots of speculation on what would happen if we had let everything fail. The problem is things could still fail. How much more can the government help? 1 trillion, 10 trillion, 100 trillion? It isn't like any of that money really exists.

I am reminded of my parents that went through a rough patch and used credit cards and home equity to help get them out of it. This worked great for about 10 years until everything was maxed and there was no more credit to access. They then had to declare bankruptcy.

With all these bailouts are we finally at the point where the United States has no way even if they wanted to get out of debt? Even if we had surpluses or balanced budgets could the interest on our debt be too much? We may just experience hyperinflation along with our entire country declaring bankruptcy. If that is the case then we might look back and wished we had not bailed out every company that asked for money.

On the other hand things could pick up, consumers start spending, businesses start hiring, our car companies turn it around with help and we are very greatful for the bailouts.

[disneysteve]

Originally Posted by rooskers

It isn't like any of that money really exists.

What a great statement. I love it.

[MoneyTrev]

Nothing happening? Consistent bankruptcy from companies until there's no one else to bankrupt.

I don't know why some companies choose to take a riskier route than other company. If a small change can cause you to need money, then you shouldn't be taking the risk.

[GREENBACK]

I don't believe we should be propping these companies up in hopes that we'll see an instant turn of events. I think these companies want to stay alive til they can return to buisness as usual. IMO they need major changes to the entire buisness model for long term survival. If they get the feeling again that people will buy the same stuff at the same prices nothing will change. The fact that no plan for long term change is in place means they want to do things like they've always done them.