In September 2008 Congress approved a Bill to bail out the financial industry to the tune of $800 billion dollars in what was known as TARP. It faced rampant opposition from conservatives and Tea Party members who were ultimately strong-armed by President Bush and Treasury Sec Henry Paulson to approve it. Ultimately over 1.5 trillion dollars of tax payer money was spent on the bailout only for the American people to learn the financial industry was more profitable than at any point in history. So what would have happened if deficit hawks and fiscal conservatives had voted with their hearts and vetoed the bill a second time? Would the financial economy really have collapsed or was that just fear mongering by Wall Street?
Umm you do realize that the government actually turned a $200 billion dollar
profit on TARP? And that if they hadn't don't it we would still be trying to dig out of the wreckage?
You know that little problem back in the 1930s? Called the Great Depression, it is very likely that this would have been worse - by like an order of magnitude. The current industrialized world has on the order of 5-7 days worth of food supplies in the pipeline and on the shelf, crash the banking system and no more food shipments get made. Because nobody is getting paid, nothing gets shipped. We have on the order of 3-5 days of fuel in the tanks and on the road, crash the banking system and that stops. Companies stop paying people, people stop spending the economy grinds to a halt. In the 1930s everyone had some cash - how much cash do you have in your house right now? Most people I know use credit and debit cards - even the people who are using mostly "cash" are using debit. Take out the banks and those cards stop working, EFT, stops working.
Things get ugly very fast. The folks that voted against TARP were really not thinking, the people that argue against it were really not thinking.
(This may be too soon for this to be history, since we are still having this argument in Political News).
Tom.