patrick.net

"The debts and the obligations are just passed around and eventually they’re socialized by the issuance of more paper money."

There's a difference between the depositors at a bank and the owners. Depositors are insured by FDIC up to $200K as you suggest, but investors/owners aren't. When a bank fails, they lose. And their investment shrinks. There is no "socialized" risk for them.

tatupu70 says

“The debts and the obligations are just passed around and eventually they’re socialized by the issuance of more paper money.”
There’s a difference between the depositors at a bank and the owners. Depositors are insured by FDIC up to $200K as you suggest, but investors/owners aren’t. When a bank fails, they lose. And their investment shrinks. There is no “socialized” risk for them.

The FDIC is paid for by fees on the banks not the taxpayers (at least until they need a bailout). The bank owners aka stockholders used to lose. Not any more. With the bailouts of the last 2 years the risk is socialized. Not to mention god only knows what crap the fed has bought up from the banks. Gutless pandering politicians buying votes with taxpayer money is the root of today's problems not capitalism. Time to throw the rascals out.

bob2356 says

The FDIC is paid for by fees on the banks not the taxpayers (at least until they need a bailout). The bank owners aka stockholders used to lose. Not any more. With the bailouts of the last 2 years the risk is socialized. Not to mention god only knows what crap the fed has bought up from the banks. Gutless pandering politicians buying votes with taxpayer money is the root of today’s problems not capitalism. Time to throw the rascals out.

Unless I missed it--which is certainly possible--there hasn't been a bailout of the fdic (yet). And again--the owners of the bank lose everything if it goes under, so their risk isn't socialized at all.

My vote is for getting the money out of campaigns--too many votes are bought before the politicians are even in office...

bob2356 says

The FDIC is paid for by fees on the banks not the taxpayers

This is laughable. Every single fee, tax or other payment required by law is passed on to the consumer (even those who "don't pay taxes" DO PAY TAXES) If you buy anything, earn anything, you paid taxes.

tatupu70 says

And again–the owners of the bank lose everything if it goes under, so their risk isn’t socialized at all.

My point exactly. The owners of citibank, boa, etc.,etc. should have lost everything, not put on life support with taxpayers dollars. How is it the bailouts and implied future bailouts are not socialized risk? What about freddie and fannie, private corporations now owned by the taxpayers? Do you really believe that the "to big to fail" institutions aren't engaging in even more risky activities knowing they will be bailed out again and again?

AdHominem says

his is laughable. Every single fee, tax or other payment required by law is passed on to the consumer (even those who “don’t pay taxes” DO PAY TAXES) If you buy anything, earn anything, you paid taxes.

So don't put your money into FDIC insured institutions if you don't want to pay for FDIC insurance. So what as a consumer would you be willing to do without? Food inspections? Insurance for contractors working on your house? Emmissions controls on cars? Wastewater treatment? You spend a lot of time telling everyone what the government should not do, so what should the government do? If you truly believe the function of government is nothing then why stay in America? There are places where the government does nothing that would be more satisfactory I would think.

bob2356 says

My point exactly. The owners of citibank, boa, etc.,etc. should have lost everything, not put on life support with taxpayers dollars. How is it the bailouts and implied future bailouts are not socialized risk? What about freddie and fannie, private corporations now owned by the taxpayers? Do you really believe that the “to big to fail” institutions aren’t engaging in even more risky activities knowing they will be bailed out again and again?

Apologies. I misunderstood your post. Yes, the bailouts do present a moral hazard. Personally, I don't think they are taking this as a free pass to do what they want because I think it was made clear that they won't be bailed out again. But, I understand what you are saying. And I agree 100% that we need to break up any corporation that is deemed "too big to fail".

bob2356 says

So what as a consumer would you be willing to do without? Food inspections? Insurance for contractors working on your house? Emmissions controls on cars? Wastewater treatment? You spend a lot of time telling everyone what the government should not do, so what should the government do?

I'd go without all of the above except water treatment, but that is a local issue. I don't feel any safer knowing some overpaid bureaucrat has all these things "figured out" and "dummy proofed."

Federal government should provide for free trade between states, defense of our borders, legal immigration laws, coinage of money and maybe a few other things.
Feds should not handle:
Education
Health Care
Guns
Highways
"War on drugs"
or "bailouts"
among others

State government should do these, if deemed necessary. Otherwise let the people have their freedom. 10th Amendment.