FINAL+JUDGMENT+ASHLEYKIM

Decision: We should **not** have bailed out the banks ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,................,,,,, Alternative? .... BANKRUPTCY.



**We should not have bailed out the banks and other financial institutions.**

Primarily: A bailout of the bank would be risky to consider even if it did completely restore the economy in the short term, however this plan will not do that, since it does not address the problem of the burst of the housing bubble. Simply by bailing out the banks we are not going to get out of this recession, even if we do prevent economic collapse

What it comes down to is whether the short term or the long term is more important - if we bail out the investment banks they will realize they have "immunity" and it is only a matter of time before another one of these crises comes up. Then if we bail them out they will take more risks and another problem will arise.

We __cannot__ keep bailing them out.

Eventually we will have to face up to the problem, and by then we will have already have encountered trillions of dollars in financial loss and a cynicism about the market economy. The quicker we act the faster we can overcome this, the lower the loss we will incur.



//In order to solve this we need a solution that corresponds with our main argument and is in accordance with the market economy, we need to allow the banks to become what they would become with no government intervention.//

Yes: ,,,,,, Bankruptcy.

To start with, there are a few misconceptions about bankruptcy. People think that when the company declares bankruptcy that the company collapses and is never seen again.


 * What happens when a company declares bankruptcy?**

When a company declares bankruptcy they file a claim to the court saying that they cannot pay back their debt. The court evaluates their situation and decides whether they fall under chapter 7 or chapter 11.

__What is Chapter 11 Bankruptcy?__
 * The court is saying that the company is **worth saving**.
 * The Judicial Department will send advisors to restructure the company so that it can fix flaws and become profitable
 * If money is given, only the **bare minimum after careful evaluation**
 * It is restructured and redistributed so that the company cannot run like it did before and has to make sacrifices and work hard in order to survive again ("Chapter 11 bankruptcy - what is it?")
 * If the company fails...

__Chapter 7 Bankruptcy__
 * The company is **not worth saving**
 * Everything in the company is exchanged for cash (liquidated)
 * This cash is used to pay back any investors ("Chapter 7 bankruptcy - what is it?")




 * Yes**, a lot of the companies are probably in enough debt that reorganizing will not save the company - a lot would have to liquidate



In order to alleviate short term effects we can use the 700 billion dollars that would have been spent on the bailout on something else - such as creating temporary artificial new jobs, and employing people so that the unemployed from the banks would have somewhere to work. We could also use it to offer incentives for companies to hire more laborers. These would be encouraging employment, **without directly distorting the fundamental principles of the economy.**

At the beginning when these financial institutions go bankrupt, there is going to be a very bad economy for a while.

However, we allowed it to be a market economy, and so the market economy will continue.
 * A fundamental of the market economy is that if there is demand, supply is there or it is **formed**.
 * There is a very big **profit opportunity** if these various investment banks become bankrupt and liquidate
 * They were earning very large amounts of money and other companies that go into this business can too.


 * Therefore, eventually new institutions will form**
 * These institutions would know that they cannot mess up and take stupid risks like the old investment banks
 * They will see that even though investment banks are important to the economy, that they are **not immune**
 * If they make mistakes like the old system then they know that they will **also fail**
 * A very great deal of **incentive** to do well and succeed without taking risks that may be fatal to the economy

In the long run this is the most beneficial for the economy.

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