Let's have a Serious Discussion Which Scenario would be More Expensive

S

staffpro

Discussion Question:

Which Scenario would be More Expensive for the average US Citizen (by average lets say the majority from 0-$200,000 income) or in general which situation is better for the average citizen.

Scenario A) Aig fails, Wamu fails, many more banks fail one after another, SP500 falls to 700 dow to 8000, 401k's worth alot in 2007 are now worth nothing especially the majority of people who did not diversify properly, fed cuts rates to 1 or less, another round of free money for the possibility of this crisis repeating 5-10 years down the road.

Scenario B) RTC takes on all bad assets, treasury prints money like no tomorrow, stocks "go up" lol, people are happy for the short term although they are not aware of how much their money is losing value. Dollar returns to 1.60-1.70 against the euro, us exports soar, and we somehow make it through this mess?


If anyone wants to correct my scenarios feel free to do so, but in every post voice your opinion and state why you think either one would be better.
 
Quote from staffpro:

Discussion Question:

Which Scenario would be More Expensive for the average US Citizen (by average lets say the majority from 0-$200,000 income) or in general which situation is better for the average citizen.

Scenario A) Aig fails, Wamu fails, many more banks fail one after another, SP500 falls to 700 dow to 8000, 401k's worth alot in 2007 are now worth nothing especially the majority of people who did not diversify properly, fed cuts rates to 1 or less, another round of free money for the possibility of this crisis repeating 5-10 years down the road.

Scenario B) RTC takes on all bad assets, treasury prints money like no tomorrow, stocks "go up" lol, people are happy for the short term although they are not aware of how much their money is losing value. Dollar returns to 1.60-1.70 against the euro, us exports soar, and we somehow make it through this mess?


If anyone wants to correct my scenarios feel free to do so, but in every post voice your opinion and state why you think either one would be better.
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Ah yes, the bailout has made it so everything is coming up roses. For now and in the future! LOL. That's what "they" are telling us. More like pushing daisys.

To quote from scenario A ... "the possibility of this crisis repeating 5-10 years down the road."

Needs to be applied to scenario B with a mess of Trillions (that's Trillions with a T, and an s for plural) at the start.

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Osorico
 
Quote from staffpro:

Discussion Question:

Which Scenario would be More Expensive for the average US Citizen (by average lets say the majority from 0-$200,000 income) or in general which situation is better for the average citizen.

Scenario A) Aig fails, Wamu fails, many more banks fail one after another, SP500 falls to 700 dow to 8000, 401k's worth alot in 2007 are now worth nothing especially the majority of people who did not diversify properly, fed cuts rates to 1 or less, another round of free money for the possibility of this crisis repeating 5-10 years down the road.

Scenario B) RTC takes on all bad assets, treasury prints money like no tomorrow, stocks "go up" lol, people are happy for the short term although they are not aware of how much their money is losing value. Dollar returns to 1.60-1.70 against the euro, us exports soar, and we somehow make it through this mess?


If anyone wants to correct my scenarios feel free to do so, but in every post voice your opinion and state why you think either one would be better.
More...

Scenario C - Govt. waits for banks to fail, takes them over ala the RTC. Shareholders get wiped out, which is what they deserve for allowing their incompetent management to destroy their company. Tax payers have no risk of over-paying for the MBS in the proposed auction-style bailout plan now being considered, and no chance these destroyers of public wealth and prosperity are allowed to survive.
 
The Paulson/Bernanke bailout is nothing like the RTC scenario. The RTC took over insolvent banks, paid out depositors, and sold marketable assets to a high bidder.

The bailout woud keep insolvent enterprises afloat (c.f. AIG). The government would force the taxpayer and well-run companies to subsidize badly-run ones, all in the name of public good. Welcome to the USSR!

I would rather live through a financial meltdown.
 
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