Bailout Essay

As the cartoon depicts four young children playing monopoly and the slogan “what do you mean you need a bailout” I believe that the cartoon is of the opinion that the artist is against the bank bailouts. From the journals I have research one questions whether the bailouts are always fair by looking at are the crisis banks face brought on by themselves or are they caused by external factors. Dewatripont European banking: Bailout, bail-in and state aid control from the International Journal of Industrial Organization Volume 34, May 2014, Pages 37–43 likens the crisis of 2008 to other crises that have come before them and what are the lessons that we have learnt. The financial and banking crisis intervention can have a “spill-over” effect on

Some believe bailouts are critical to stop the domino effect in the financial sector and the loss of employment ”Bailing out Wall Street bankers is necessary to keep the US economy from crumbling even further and taking American workers down with it.” (Barack Obama, US president, 29 September 2008). But also state that banks can find a new equilibrium without government intervention Bailout is not necessary “The banking industry can handle this mess internally and does not need subsidies.” (Bert Ely, a leading expert on banking and finance in the Washington policy community, 24 September 2008). In my opinion I believe that government intervention that in theory government intervention is necessary to stop the domino effect on the innocent citizen. However I think that the for government intervention for example in wall street is bailing people and company out who reaped the rewards while they were successful and supply a safety net to them when they fail as is stated in Dam and Koetter Bank Bailouts and Moral Hazard: Evidence from Germany