Big Government, Capitalism, Corruption, Economy, Incompetence, Issues

Did the bank bailouts really save the free market system?


Eight years ago, on September 15, Lehman Brothers failed, starting a rapid series of events that resulted in the bank bailouts and the country has not been the same in so many ways.

While President George W. Bush famously said that he, “abandoned free market principles to save the free market system” explaining his decision to bail out Wall Street, General Motors and other failing entities. But did he save it, and if so, for who?

General Motors for its part, emboldened by its debt-free balance sheet invested in new factories in China and is now importing a mid-sized crossover SUV known as the Envision. Meanwhile Flint, Michigan, which used to be known as Buick City, finds itself struggling as a city left behind, more known as a place which messed up its drinking water treatment than for its auto legacy.

The banks have largely pulled out of the tailspin, but after bailing them out, the Obama Justice Department has been busily suing the survivors and winning massive awards with the big winners being local advocacy groups who have been cut into a big piece of the pie, even though they were not harmed in any way. Investor’s Business Daily reports, “Radical Democrat activist groups stand to collect millions from Attorney General Eric Holder’s record $17 billion deal to settle alleged mortgage abuse charges against Bank of America. Buried in the fine print of the deal, which includes $7 billion in soft-dollar consumer relief, are a raft of political payoffs to Obama constituency groups. In effect, the government has ordered the nation’s largest bank to create a massive slush fund for Democrat special interests.”

This creation of a well-funded new network of housing advocacy groups, exactly like the discredited ACORN which served as the community organizers who encouraged people with next to no ability to take out loans to buy first or sometimes even bigger homes.

Since the 2008 bailout, the labor participation of workers between the ages of 16-64 has continued to drop and millions more workers have increasingly been shifted to the service economy, or what’s left of it. Those who can’t make it wash out of the economy altogether.

But perhaps most significantly, the banking collapse and subsequent bailout led to eight years of President Obama’s constantly pulling at the threads of America finding the frayed edges and sowing discontent wherever possible.

America today is less confident and surefooted about the future economically and abroad, and while it can’t all be attributed to the bank crisis, it was this seminal event that threw us collectively off balance.  Our economic lives tossed about due to events that were not only out of our control, but were not understandable.

Eight years ago today, Lehman Brothers fell, starting a domino effect which continues to this day with persistent minimal economic growth numbers and unemployment numbers dependent upon people dropping out of the economy to be maintained.

Oh what an eight years it has been.

This is a guest post by Rick Manning President of Americans for Limited Government.


    Yes, what an eight years it has been.
    The Feds quantitative easing policy, printing $85 Million Dollars a month to bail out the Too Big To Fail Banks, an action that also fueled the fires of inflation creating millions of Fiat Dollars that were backed by nothing or The full faith & credit of the United States under Liberal leadership, even worse than nothing !
    Many Americans held to their hopes that the Fed, who celebrated it’s hundredth birthday in 2013, would finally be decommissioned, but it did not happen.
    Now we have a Democrat presidential candidate that is chomping at the bit to play the war card from the Neocon’s playbook, a proven method for restoring our economy in the past. But we have no economy to resurrect this time around, it’s been exported to foreign shores and that continues with the Ford Motor Company recently sending the manufacturing of an entire product line to Mexico and the 150 year old American company Pfizer moving it’s headquarters to Ireland ! Will the last wealthy Oligarch out please turn off the lights !

  • Robert

    When the Bush administration started the bailout to save the wealthy investors, it was the biggest mistake there was except maybe the one his Father made by removing the regulations that gave the institutions the freedom to create the bubble that burst. It is no different than removing the safety valve from anything, it will eventually rupture. If the banks had been let to fail then a lot of wealthy investors including my self would have lost almost everything. If the people who invest in the Stock Market does not think it is akin to any form of Gambling then they are going into it with their eyes closed. I had a gut feeling things were going to good so I bailed about 6 months before the crash, I still lost a lot on paper because the rental properties which went to almost half their values overnight, and as of today there are still 12 which are below the value they were when the bubble burst.
    Throwing money at a bad cause never has made it better, someone always gets the money but you still have the problem. The term “to big to fail” is a misnomer, the term should be “TO BIG TO LET FAIL”
    The corporations know this and exploit it to get the tax payers money. most of the bail out money went to buy up smaller banks again.
    These institutions should be broken up and restructured, but if history is any example that is almost impossible, when MA Bell was forced to break up the, the same people ran the Baby Bells, and nothing changed we were just let to believe that it was different.
    I do not know if anyone knows the answer, I do suppose you could break up the big financial institution and bar the former Management from being involved in the new institutions but there is probably a law against that some where.

    • RLTMLT

      Good example Robert, I worked in the telecommunications industry for over thirty years and the deregulation of that industry in 1984 gave those same owners you mentioned, who previously labored in a regulated environment, the freedom to rape and pillage the American public. Interesting to note that many of the politicians in Washington who pushed for the separation of long distance and local telephone service where big investors in the various private long distance companies that sprung up after deregulation. Does anybody remember a $14 monthly telephone bill with long distance charges included based on the customer’s use of that service ? My current AT&T bill exceeds my car payment and a good portion of that bill is local, state, and federal taxes, everybody is getting a piece of the consumer pie !

      • Robert

        We had better b careful we will get banned here, I have had so many of my reply’s erased it is sad. I do try to include links to back up what I am saying but they do not want to hear that.

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