AdoreChampignons said:

Is pouring $800 Billion dollars into those faltering companies likened to pouring money into a leaking bucket?

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Will this kind of unprecedented bailout lead to runaway inflation?

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If the government goes that deeply into debt, does it mean that there's no money left for the upkeep of the infrastructure in maintaining roadways and bridges, social programs, prisons?

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The more loans the government gives out, the more interest it (you) has(ve) to pay back

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thedefone said:

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The more loans the government gives out, the more interest it (you) has(ve) to pay back

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Isn't this backwards, and isn't the interest to be collected from the loans given to the entities in question the primary source of potential income/profit for the government in the bailout scenario?

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Ferris said:

AdoreChampignons said:

Is pouring $800 Billion dollars into those faltering companies likened to pouring money into a leaking bucket?

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Ya, there's a high downside risk, but there's still the possible benefit of an upside.  For both these directions, it's hard to enumerate the spread.

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Will this kind of unprecedented bailout lead to runaway inflation?

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More likely, it will cause short term inflation in the 6-7% range.  Nothing that's not manageable for a couple of months (thank god the inflation will coincide with the holiday season).

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If the government goes that deeply into debt, does it mean that there's no money left for the upkeep of the infrastructure in maintaining roadways and bridges, social programs, prisons?

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We'll be fine.  The raise in the debt ceiling (1.5 trillion I believe), is only about 1/8 of what the debt already was.  It's a significant amount, but it's not going to be the straw that breaks the camel's back.

As far as risks that you haven't listed already, I'd be afraid that the next round of possible bailouts misses the target, or that there will be more bailouts afterward, or that this will encourage future mismanagement.  A neutral effect might be the discouragement of lenders from giving loans.  Depends on which side of the fence you're on for that one.  The possible upside is that we may hash out the problems with the market and make the appropriate reforms, although I wouldn't hold your breath on that one.

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Shins said:

The more loans the government gives out, the more interest it (you) has(ve) to pay back.

The more interest there is to pay back,  the more  new loans they need to take out to pay the old ones, creating even MORE interest in a never ending exponential cycle of doom.

and extra new loans taken out speed up the process, and create higher amounts of volatility in the markets as the debts soar, and money devalues.

people are thinking "F--- cash, i want commodities" which creates liquidity problems and banks fail, since they are in the business of cash.

as i see it, the biggest risk is the future of banks and finacial institutions,  which dont contribute anything of value to the economy anyways.  all they do is suck suck suck liek a parasite.

but anyways... yeah.

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Ya, there's a high downside risk, but there's still the possible benefit of an upside.  For both these directions, it's hard to enumerate the spread.

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Annapurna1 said:

i think the risk is that their going to hit us for another $800B next year..and the year after that..and so on.. as long as they know that they can hold the public to ransom...

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So if you're Incompetent and screw up and then we bail you out its not a lesson learned?

adjust said:

Shins said:

The more loans the government gives out, the more interest it (you) has(ve) to pay back.

The more interest there is to pay back,  the more  new loans they need to take out to pay the old ones, creating even MORE interest in a never ending exponential cycle of doom.

and extra new loans taken out speed up the process, and create higher amounts of volatility in the markets as the debts soar, and money devalues.

people are thinking "F--- cash, i want commodities" which creates liquidity problems and banks fail, since they are in the business of cash.

as i see it, the biggest risk is the future of banks and finacial institutions,  which dont contribute anything of value to the economy anyways.  all they do is suck suck suck liek a parasite.

but anyways... yeah.

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Pretty much mirrors my thoughts. However, aren't commodities going down right now?

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Ferris said:

Seriously though, how are we supposed to punish these executives and their companies, other than let their companies go through the tank? (which would just hurt the company).  We can't send em to jail.  The dems bailout plan limits executive pay for companies receiving help.  That's at least a start.  It's not far enough though if punishment is what you're looking for.

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Ferris said:

Seriously though, how are we supposed to punish these executives and their companies, other than let their companies go through the tank? (which would just hurt the company).

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