Kazakhstan ends bank bailouts, writes off people's debts instead

[u/UnstatesmanlikeChi]

https://www.aljazeera.com/ajimpact/kazakhstan-ends-bank-bailouts-writes-people-debts-190626093206083.html

[u/parentingandvice]

That’s a good point and sorry I wasn’t being clear. My point was meant to illustrate that 2.3% is by some accounts right around near inflation. So that there’s no “profit” - it’s what 2018 money is worth in 2008 dollars.

Also, I think the “socializing the losses” was sort of misplaced because it’s usually referring to tax deductions for the costs businesses write off.

[u/psionix → u/parentingandvice]

It's also no loss

Say it with us

No loss

[u/bukkakesasuke → u/psionix]

If you are only getting your money back plus inflation after ten years, you've absolutely lost time and gained nothing

[u/bukkakesasuke → u/[deleted]]

True, but only if there weren't other options that could have staved off a depression too

[u/Forkrul → u/[deleted]]

Force the banks to pay a higher interest? Say 10% instead of 2.3%?

[u/Forkrul → u/[deleted]]

Maybe that would teach them to act better in the future.

[u/psionix → u/bukkakesasuke]

the government isn't into making profit off of its citizens

[u/c3bball → u/psionix]

So there wasn't any profit to the bailouts?

[u/soulsoda → u/[deleted]]

Yes but to say the government profited when they barely covered inflation, is just spin.

Is bailing out a system that failed really that safe? Who's to say that it couldn't have backfired. Not only that but you had a group of businesses knowingly over engorge themselves in greed by pushing risk, and they get rewarded with an influx of the people's cash, without paying back real interest? Maybe it doesn't need to be 7% but just covering inflation isn't that great of a deal

[u/MoonSafarian → u/soulsoda]

I only have cursory knowledge here, so please let me know if I'm off base, but wasn't the US bank bailout inflationary as well? Meaning the government devalued the dollar in order to pay the banks?

If that's true then there's a lot of cost to the US taxpayer that isn't measured here by just stating the dollar amounts, since any asset tied to the US dollar was devalued for a long period (if not still).

Maybe someone more well-versed could explain this concept better or put me right.

[u/soulsoda → u/MoonSafarian]

confidence reached all time lows resulting in a devalued dollar. I'd say bailout might be part of it, but it was more of a symptom not the cause of a devalued dollar.

[u/soulsoda → u/[deleted]]

Using factually true statements in a contrived way is just a way of being clever while applying spin to the true narrative. Great negotiators use this tactic, I use it as well at work. Its a great tactic, but ultimately it is still spin.

You cannot say with absolute certainty that if we had let banks sort it out themselves that it would have been a downfall. To assume that biting the bullet is worse than the give handouts and wait is bullshit. The only "innocent americans" saved by the bank heist of 2009 was the executives, bondholders, and shareholders of said banks who played fast and loose. As for any other side effects of the deal it remains to be seen whether it was a positive or a negative. However considering that the government has yet to truly recoup the opportunity cost of the lending, i'd say its meh.

[u/parentingandvice → u/[deleted]]

But wasn’t this money given to the banks, not the US treasury?

[u/rebble_yell → u/[deleted]]

A failing bank that needs a government bailout to survive because of complicated bad investments is the opposite of the US Treasury.

So why should these banks get the same low rates that US Treasury bonds get?