Re:Federal Reserve pledges asset purchases with no limit to ...
by mistermann on Monday March 23, 2020 @01:33PM
(#22666405)
> We are talking about companies which have plenty of assets and strong businesses.
Technically true, but I would argue misleading (note: not implying intent on your behalf).
"We are talking about companies which have plenty of assets and fragile, taxpayer supported businesses" contains kind of the opposite message of your statement, yet this statement is also technically true.
> Thus the FED is acting as a lender of last resort directly to major corporations. Without this last resort said corporations would need to either fire-sale off assets to pay the principle on these bonds or face a technical default.
Again, technically true, under the circumstances we find ourselves in. But might the existence of the Fed, and its past policy responses to such events, have possibly creates an environment of moral hazard whereby events like this are practically guaranteed?
> Which is to say: these bailouts are going to happen. No one who understands what is at stack would choose to "let the house fall".
This seems like a bit of a false dichotomy to me, as if letting the house fail or bailing them out (once again) in this fashion are our only two options.
In a true capitalist system, the US government would receive equity in all the companies they bail out.
At some point I think it would be a good idea for us to admit to ourselves what kind of economic system we really have in the West, and try to determine if it is up to the task of competing with China and their economic system, which to my eye is clearly superior (based in part on observable relative performance in the last 20 years).
Technically true, but I would argue misleading (note: not implying intent on your behalf).
"We are talking about companies which have plenty of assets and fragile, taxpayer supported businesses" contains kind of the opposite message of your statement, yet this statement is also technically true.
> Thus the FED is acting as a lender of last resort directly to major corporations. Without this last resort said corporations would need to either fire-sale off assets to pay the principle on these bonds or face a technical default.
Again, technically true, under the circumstances we find ourselves in. But might the existence of the Fed, and its past policy responses to such events, have possibly creates an environment of moral hazard whereby events like this are practically guaranteed?
> Which is to say: these bailouts are going to happen. No one who understands what is at stack would choose to "let the house fall".
This seems like a bit of a false dichotomy to me, as if letting the house fail or bailing them out (once again) in this fashion are our only two options.
In a true capitalist system, the US government would receive equity in all the companies they bail out.
At some point I think it would be a good idea for us to admit to ourselves what kind of economic system we really have in the West, and try to determine if it is up to the task of competing with China and their economic system, which to my eye is clearly superior (based in part on observable relative performance in the last 20 years).