Spitzer's last point, about bailing out the financial institutions being un-necessary seems wrong to me. From what I can see, there would have been a chain reaction of deaths of financial institutions without it. Institutions of that size would require massive manpower to unravel in a controlled way, and take more time to do than the institutions would have had (think GM). Unlike GM, who's main assets are properties such as factories, materials, and designs, the banks' assets are knowledge of who owes what to whom. Rapid failure of the big financial institutions would have resulted in the loss of a significant amount of that knowledge through sheer logistics in the chaos of going out of business.

Let's presume the financial system as a whole survives, certainly not guaranteed in that scenario.

When a normal business or a small bank goes out of business, there's not a huge risk. Normal businesses have assets such that even if something major, like a factory or a car design was lost it affects some people, but it's basically known what was lost and the market can easily adjust. When a small bank goes out of business, it is fairly easy for another bank to buy it up, transfer it's files, and continue on because the manpower is available to do so. A string of large banks failing would far outstrip that manpower, leaving some of the dying institutions without the ability to transfer their knowledge before the proverbial power gets cut off.

Who owes what to whom is the basis of the value of money. When you lose financial records on that scale, even one hard-drive's worth and even if fairly contained, the chain reaction of people suddenly showing as not having the assets to support debts elsewhere and going into default would still hurt the economy. On the scale that threatened to happen, the whole economic system could have failed.

I don't like having to bail out the big financial institutions. I think they're so corrupt in general that they need major overhauls. They often prey on their customers more then help them. However, proping up their evils and excesses with a few more billions isn't as bad as the alternative that likely would have been.

They've hurt the world's economies with their antics. They're continuing to do so even now. Letting them die would have killed the economies instead.

Bah, I didn't check what I wrote well enough: restated things too much and should have removed the "Let's presume" sentence.

Also, it's not certain that companies would have died without holding on long enough to be able to transfer their accounts. I think it is likely some would have died that way, but mine is a layman's opinion, not a professional's. The main way I can see the bailouts being useful to us, much less necessary, is in this scenario. That's why I'm presuming the legislators were thinking along those lines to give them the benefit of the doubt (both the Bush and Obama administrations).

Bah, I didn't check what I wrote well enough: restated things too much and should have removed the "Let's presume" sentence."

FYI, until someone replies to your post you can delete it. So if you want to edit, you can just copy the first post into word, delete it and then repost.

and by bailing them out we've gaurranteed that in the future we'll have a bigger crises because all the big banks will feel certain they'll be bailed out.

And to top that off it means that the most logical thing for all regional and smaller banks to do is to merge into superbanks and become too big to fail.

things like this always make the long term picture worse. Its like our 30 years of bandaid fixes to social security and medicare that are about to start dragging us under. You can suffer the pain now and fix the problem or you can shove it down the road till it consumes you.

We've chosen to shove it down the road because the baby boomers think they are too special to suffer for thier own actions.

"I don't like having to bail out the big financial institutions. I think they're so corrupt in general that they need major overhauls. They often prey on their customers more than help them. However, propping up their evils and excesses with a few more billions isn't as bad as the alternative that likely would have been."

A few billion here and a few billion there of our taxpayers money has been thrown away. The automakers got bailed out and what did the taxpayer get--two auto makers bankrupt. Eliot's article was well thought out. We will have a very difficult time turning this economy around. With higher corporate taxes along with higher taxes for the rich, we are seeing companies like Microsoft threatening to take their business outside of the United States. Good bye to jobs.

Anyone else think that Eliot Spitzer was 'taken out' by his enemies on Wall Street just in time for the whole bail out criminal enterprise to take place? Wall Street hated Mr.Spitzer because he actually wanted to do his job and saw through the game that was being played out. I wouldn't be surprised if he was told, 'take a dive or your family will be next....'

Welcome back, Mr.Spitzer. It's good to see honesty and intelligence back commenting on things.

Unfortunately, you are right about the coming economic mess. Without cheap oil to power things as we've had for the last 100 years, things are going to get pretty dicey, especially in a country run by thieves, sycophants and psychopaths.