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**Jeaxatoem** · 03-17-2008, 06:15 PM

I'm kind of interested in what the real options are when dealing with a financial crisis. As I see it there are three main options:

1) Bail out, this is usually supported by people who have something directly to lose from the crisis, they point out the dire negative effects of doing nothing (jobs lost, companies going bust, pension funds & other investors going bust) and rationalize that a bail out is the only way to avoid those negatives. The con vote says that this only encourages bad behavior and costs taxpayers oodles of money.

2) Do nothing approach. This tends to be supported by the far right who point out allowing businesses to go bust makes and example of them and discourages others from such speculations in the future. Progressives point out that often it is not just the guilty but regular joes who get hit including pension funds meaning lots of penniless old folks in the streets while the financial crisis deepens into a possible depression taking down healthy companies along with the unsound ones.

3) Do some things but not others. A split the difference approach which says the risks of doing nothing are so dire that we must have some sort of bailout but at the same time acknowledging this will lead to more bad behavior. Thus regulations need to be enacted to stop the counterproductive speculative behaviors so that taxpayers aren't stuck cleaning up crisis after crisis.

Which way is best and are there other solutions out there?

03-17-2008, 06:15 PM	#31
Jeaxatoem Join Date Nov 2005 Posts 546 Senior Member	I'm kind of interested in what the real options are when dealing with a financial crisis. As I see it there are three main options: 1) Bail out, this is usually supported by people who have something directly to lose from the crisis, they point out the dire negative effects of doing nothing (jobs lost, companies going bust, pension funds & other investors going bust) and rationalize that a bail out is the only way to avoid those negatives. The con vote says that this only encourages bad behavior and costs taxpayers oodles of money. 2) Do nothing approach. This tends to be supported by the far right who point out allowing businesses to go bust makes and example of them and discourages others from such speculations in the future. Progressives point out that often it is not just the guilty but regular joes who get hit including pension funds meaning lots of penniless old folks in the streets while the financial crisis deepens into a possible depression taking down healthy companies along with the unsound ones. 3) Do some things but not others. A split the difference approach which says the risks of doing nothing are so dire that we must have some sort of bailout but at the same time acknowledging this will lead to more bad behavior. Thus regulations need to be enacted to stop the counterproductive speculative behaviors so that taxpayers aren't stuck cleaning up crisis after crisis. Which way is best and are there other solutions out there?
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