A contingent bailout policy - implicit or explicit - must be coupled with some regulation of what banks can and cannot do. For example, a ban on lending to uncreditworthy customers might well make sense.
State constitutions typically provide that the state first has to service its debt, then make it pension payments, and then pay for services. What we don't know is whether that order will be enforced. And ultimately, the busted state is going to be looking to the federal government for a bailout. Think Greece, but on a much bigger scale.
California is going to take themselves off the cliff culturally and economically, fiscally. They are going to be at the trough in Washington wanting a bailout.
A more robust approach to global warming is needed if we are to avoid catastrophe. Unlike the recent financial crisis, there is no bailout option for the earth's climate.
The bank bailout should have been more focused on helping small and medium sized banks, on helping homeowners. I think the trade agreements are a disaster.
Remember the Tea Party movement didn't get started in September of 2008 when the bank bailout was passed. It really began on Feb. 19th, 2009 when a television commentator named Rick Santelli stood up and said what the hell are we doing bailing out people who couldn't afford a mortgage by taking money from people like me who are prudent?
The Tea Party movement started in late 2008 as a rejection of President George W. Bush's bailout of the auto industry and Obama's excessive stimulus spending. It evolved into a movement opposed to ObamaCare, and grassroots efforts were employed to find qualified political candidates who could beat incumbents.
The bailout of Fannie Mae is completely off the books. It's going to cost us hundreds of billions of dollars. Yet nobody is placing this in any type of column in accounting for federal debt.
In 2008, when Lehman Brothers collapsed, we anticipated that Europe was going to have a very different bailout scheme than the U.S. because of their different political systems and different relationships between the central banks and the fiscal authorities.
Any bailout of a private company is a bad decision by our federal government. Private companies have the right to succeed, but they also should have the right to fail.
