Hello, I’m new here and I just have a simple question. What would our economy look like now if we hadn’t nationalized the banks? A lot of people here in the U.S seem to think that bailing them out was a good thing and they say that they feel safer knowing that the government owns a good percentage of the banks. So, do you think bailing them out helped us or hurt us?
It hurt us terribly because it increased the Federal debt. I also hurt us because it gave businesses that screwed up an incentive for screwing up.
The Reserve ratio also could’ve been raised to 100%, so that everyone would’ve got their money out and prices would’ve fallen. Also, there have been several bank failure this year, more than the government allegedly thought there would be so the bank bailout didn’t do any good. It only hurt the people.
Absolutely hurt. A prosperous free economy has profit and loss as its basic score keeper. Private banks and their government sponsored partners used their influence to get the profits and socialize (Dump on the taxpayers and holders of currency) the losses in this scheme. Now in the short run there may have been considerably more suffering but in the long run the economy would have washed out the players who made bad decisions and favored those that made good decisions. The problem with the bailouts is that in the long run you have zombie organizations that continue in the same business areas that should have gone out of business and manage to consume scarce savings that other entrepreneurs would be able to use more effectively.
Picture a guy hanging over the abyss while holding onto your balls with both hands, very tightly. Would cutting your balls off help you or hurt you?
Welcome aboard. 
First off, I’m wondering what you mean by “the banks”. I assume you mean the “major” banks, but I could be wrong. Regardless, though, how were any banks actually nationalized?
Second, I think the bail-outs were harmful because they’ve prolonged malinvestments. Think of the bail-outs as subsidies for bad business decisions.
Welcome to the forum.
An important point to keep in mind is that money doesn’t grow on trees. The government has no money; it is not a store or factory that sells things in exchange for money. It just acts as a pipeline, taking money from one person to give to another.
Having established that, the question becomes, “Was it a good idea to take your money [without asking you or giving you the option to refuse] and give it to the banks?” Say a banker was going door to door and knocked on yours.
“Hi there. I’m a rich banker, or used to be. I did something stupid and very risky, and I lost not only my money, but the money of all the people who put money in my bank, thinking I know what I’m doing with it.”
“OK. You have my sympathy.”
“Oh, I want much more than your sympathy. What I want is for you to pay $4 for a gallon of gasoline instead of $2 from now on, and 10% more a year for food and everything else. Your name will be put into a hat with ten other people, and the lucky winner loses his job forever.” [Note: you may have to do some reading here to see how all these things follow from the bailouts]."
“Yes, I suppose you deserve that. Sure.”
Yeah, I meant major banks or any banks that received bailout money.
“how were any banks actually nationalized?”
They weren’t, I don’t know why I used that word in the OP. My friends were raving about how great the Swedish nationalized banks were so I guess it just stuck with me – weird.
That would be extremly painful.
Thank for the reply. That’s a great way to look at it.
Do you think falling down into the abyss with him would be even more painful?
Regardless, though, how were any banks actually nationalized?
U.S. banks were effectively nationalized in 1913, with the creation of the Fed.
on top of everything else said, some of the money went to foreign banks!
Is that not unbelieveable? I have to give King Paulson and Bush/Obama and their administrations credit for that…that took some guts to do that.
Well, yeah, 'cause we would both die, but I still wouldn’t cut off my balls. I’d just push him off, or at least I would try. 
Indeed. Ron Paul said they gave out over 100 trillion dollars? Or some huge number like that.
It’s insane.
Ah, yes, the famous Scrotum Theorem… I really lol’d when I read this.
Clayton -
Yes, it’s LOL funny even though it exactly described the predicament in which customers (masses, ball-owners) are being placed by fractional reserve bankers (ball-holders), especially of the monopoly sort. Sweet gig if you can get it.
We didn’t nationalize the banks lol. Talk about a loaded question.
The banks would have probably had to shut down a lot of departments, and a lot of people would have lost money and/or their jobs. Unemployment would skyrocket (as if hasn’t already). And worker militancy would have spread like a wildfire.
I’m no psychic. But that sounds about right to me.
Of course “we” nationalized the banks. It occurred in 1913.
Dave you mistake my answer for support of the bailouts. I was against them before any republicans I know, that’s for sure (not to insinuate you are a republican).
Big mistake. Before the bailouts, a lot of people has ALREADY LOST money. The bailout was about taking money away from the taxpayers, who had not put any money in the banks, to give to the bankers and their depositors.
If you are familiar with the concept of fractional reserve beanking, you know that for every dollar the depositor gets from the taxpayer, the banker gets ten. Thus the huge bonuses the bankers gave themselves with the bailout money
Whether or not I give a crap if some millionaires lose money they didn’t deserve aside ( I don’t), there would have been far more money lost (at least in the short term).
If the burger flipper cooks raw burgers every day, sneezes into the french fries, and spits into the drinks, whether on purpose or by accident, he of course deserves to lose his job. Similarly, when the banker does not know how to make money, but only how to lose it, and in the billions of dollars, he too deserves to lose his job.
And if the burger flipper works dilligently, goes to school part time at night, and still loses his job because some banker, who he had no connection to, and no hand in the pot, can’t handle money… I find that a travesty. And your anti-worker hyperbolic rhetoric is pretty disgusting, imo.
What does this even mean? The bankers would rise up in arms and storm houses by force to take people’s money? Better to give it to them without violence?
You know I’m a revolutinary leftist, right? I’m all for worker militancy, if it’s called for. And the situation in the developed world, imo, calls for it.