Nope, they do it to protect the system from blowing, since
typically if the banking system collapses, the govt.
finds itself immediately bankrupt as well.
I agree, there are favorites according to lobbyist efforts.
Some are let live, some must die, some had shotgun marriages
(Bear, ML, etc.)
The policies were inconsistent, full of moral hazard and
panic. This was not done to pay the criminals (although
AIG save might have had something to do with Paulson and
Goldman's position) In particular, since Goldman/Morgan
had derivative positions offsetting their risk, they
benefitted from the govt. save and systemic failure,
it was derivative chain reaction that the govt. was trying
to prevent.
Derivatives are just bilaterial agreements that shift risk
around, offloading it on "weak links".
The situation is messy and dangerous. The govt will print to
raise asset prices and stabilize the situation, and this won't
result in huge inflation, but it may not work. |
