WI: No bailout of the banks, auto industry loans, or economic stimulus in 2008-2009?

I am considering a TL where the two party system fails in the US in the late 90s-early 21st century.

One of the events in the TL is that the auto industry and the banking industry don't get the bailouts they needed to keep themselves afloat. Also, a Republican President is elected in 2008 who pushes for large tax cuts rather then an Obama-style stimulus.

How much worse could the economy have gotten if the banks hadn't been thrown a lifeline, the auto industry had collapsed entirely, and there was no stimulus?
 
How much worse could the economy have gotten if the banks hadn't been thrown a lifeline, the auto industry had collapsed entirely, and there was no stimulus?

How much worse? America could've entered a Second Great Depression with high unemployment, a large scale financial collapse, and a sharp increase in poverty and homelessness.

In the unlikely event that a Republican wins in 2008, the Democrats sweep the 2010 and 2012 elections. However it would take years and years to recover from such a severe economic downturn.
 
One of the events in the TL is that the auto industry and the banking industry don't get the bailouts they needed to keep themselves afloat. Also, a Republican President is elected in 2008 who pushes for large tax cuts rather then an Obama-style stimulus.

One of the reasons the Great Depression went the way it did was from Bank Failures, people lost all deposits, and mortgages called in after missed payments.

2008, the FDIC and other previous programs would prevent small depositors to getting wiped out, as in '29-32 in event of actual bank failures.

In place of the OTL bailouts and QE to Wall Street, there was enough 'stimulus' money to give each Head of Household that filed for taxes in 2007 a six figure payout.

Keynesian stimulus is all about getting money moving in a moribund economy. Giving all that free money to Wall Street didn't accomplish that, which is one of the reasons why the 2008 recovery was one of the worst economic recoveries from a Recession since President Grant's effort from the 1873 Panic.

Letting General Motors go thru an actual bankruptcy would have been better. someone would have bought the bones and made cars and trucks again, and the Workers&Pensioners wouldn't have been screwed over.
 
What's your POD/PODs? Would make it easier to answer the question if we know where exactly the timeline diverges.

The POD is Paul Tsongas runs for Senate on an independent campaign in 1994. He gets backing from Perot's United We Stand America coalition.

OTL, he seriously was in talks to build a new centrist political party. TTL, it wouldn't be a stretch for him to try and run for public office.

He doesn't win, but he ends increasing the viability of third parties a bit.

Perot's own election campaign has a bit more success TTL. In broad strokes, a Republican wins office in 2000 only to screw up badly, a Democrat wins office in 2004 only to screw up as well, a Republican wins office in 2008. And after the recession deepens, third parties begin to takeover for real.
 
The POD is Paul Tsongas runs for Senate on an independent campaign in 1994. He gets backing from Perot's United We Stand America coalition.

OTL, he seriously was in talks to build a new centrist political party. TTL, it wouldn't be a stretch for him to try and run for public office.

He doesn't win, but he ends increasing the viability of third parties a bit.

Perot's own election campaign has a bit more success TTL. In broad strokes, a Republican wins office in 2000 only to screw up badly, a Democrat wins office in 2004 only to screw up as well, a Republican wins office in 2008. And after the recession deepens, third parties begin to takeover for real.

Thanks for replying. I'm just wondering about the viability of Paul Tsongas running against Ted Kennedy in 1994. Ted was untouchable - even in a GOP year vs a moderate businessman he still won going away. Unless Tsongas moves to a different state to run there in 1994?

Also, the OTL 2009 stimulus did include tax cuts but I see the point you are making. Your hypothetical package would be all/mostly tax cuts instead of the hybrid tax cuts/spending we got in OTL.
 
One of the reasons the Great Depression went the way it did was from Bank Failures, people lost all deposits, and mortgages called in after missed payments.

2008, the FDIC and other previous programs would prevent small depositors to getting wiped out, as in '29-32 in event of actual bank failures.

In place of the OTL bailouts and QE to Wall Street, there was enough 'stimulus' money to give each Head of Household that filed for taxes in 2007 a six figure payout.

Keynesian stimulus is all about getting money moving in a moribund economy. Giving all that free money to Wall Street didn't accomplish that, which is one of the reasons why the 2008 recovery was one of the worst economic recoveries from a Recession since President Grant's effort from the 1873 Panic.

Letting General Motors go thru an actual bankruptcy would have been better. someone would have bought the bones and made cars and trucks again, and the Workers&Pensioners wouldn't have been screwed over.

If GM went through normal bankruptcy odds are all the factories would immediately be shut down with everyone fired. When was the last time someone bought pieces of US car company when it went belly up.
 
When the House rejected TARP the Dow went down 777.68 points. https://abcnews.go.com/Business/MarketTalk/story?id=5912806 After that, passage was inevitable.

I once compared the situation with Trotsky's justification for initially opposing Brest-Litovsk. True, he said, doing so led to Germany driving deeper into Russia and making the terms of peace even harsher. But it was necessary to reject it at first just to show the Russian people how disastrous rejection would be and how helpless Russia would be if it stayed in the war; without this demonstration the Bolsheviks would have been denounced as German agents. (Actually, Lenin and his party had gotten money from the Germans, but that's another story.) In September 2008, tanking stocks had the same effect German tanks had in 1918: they showed that resistance was futile.
 
If GM went through normal bankruptcy odds are all the factories would immediately be shut down with everyone fired. When was the last time someone bought pieces of US car company when it went belly up.
the last time a major car manufacture went bankrupt was Studebaker in 1963, where over the past decade, only had sold more than 100,000 for two model years, last in 1959.

Nobody wanted Studebaker in 1963, after they ran the profitable side of their business empire, Packard, into the dirt by 1960

GM did go bankrupt in 2009, they just let the same clowns run it afterwards they got to discharge their debts and contracts.

In a regular bankruptcy, Chevy, GMC, Buick and Cadillac would have reorganized and restarted production with new management, and maybe Independent, many as part of another company.

But SAAB, Saturn, Hummer, and Pontiac were doomed in any outcome. By 2006, GM was in a terminal dive, having sold off GMAC(finance) and Allison, profitable units, and their stakes in Suzuki and Izuzu, just five years after they were rolling in profits.
 
the last time a major car manufacture went bankrupt was Studebaker in 1963, where over the past decade, only had sold more than 100,000 for two model years, last in 1959.

Nobody wanted Studebaker in 1963, after they ran the profitable side of their business empire, Packard, into the dirt by 1960

GM did go bankrupt in 2009, they just let the same clowns run it afterwards they got to discharge their debts and contracts.

In a regular bankruptcy, Chevy, GMC, Buick and Cadillac would have reorganized and restarted production with new management, and maybe Independent, many as part of another company.

But SAAB, Saturn, Hummer, and Pontiac were doomed in any outcome. By 2006, GM was in a terminal dive, having sold off GMAC(finance) and Allison, profitable units, and their stakes in Suzuki and Izuzu, just five years after they were rolling in profits.

Who, exactly was going to buy it? The whole economy was having a major credit crunch and it is doubtful anyone would want to pick up the pieces. It goes under , they shut the doors and everyone is fired.
 
Who, exactly was going to buy it? The whole economy was having a major credit crunch and it is doubtful anyone would want to pick up the pieces. It goes under , they shut the doors and everyone is fired.

Being able to buy GM for Dimes on the Dollar, some Billionaire would snap it up, like Buffet or Slim

That's how Capitalism is support to work, not 'too big to Fail'
GM failed.

But its Bones were were good, there was profit to made with that.
 
Sweet. Chinese owned GM.

And as soon as those reports are out that they are in talks, Some Patriotic American©®™ Billionaire or company would step up to the Plate to put in a larger Bid.

Price goes up, and Creditors and Pensioners of old GM get a better deal than OTL.
 
And as soon as those reports are out that they are in talks, Some Patriotic American©®™ Billionaire or company would step up to the Plate to put in a larger Bid.

Price goes up, and Creditors and Pensioners of old GM get a better deal than OTL.
Right, just like when Chrysler was going to be bought by Fiat. Nobody was going to step up to the plate to save GM.
 
Being able to buy GM for Dimes on the Dollar, some Billionaire would snap it up, like Buffet or Slim

That's how Capitalism is support to work, not 'too big to Fail'
GM failed.

But its Bones were were good, there was profit to made with that.

Yeah, just like how they saved our nation's flag carrier, Pan Am!

To be a bit more serious, GM's fundamentals were not good. Buffett was around during the recession and passed on GM just like every other investor because although GM could be had cheaply, its downside risk was catastrophic. They didn't ask for their loans to be secured and do managed bankruptcy as a first option-- it was their last option. When they did that, everyone with financial investment in GM, including the leadership of GM, got wiped. Trying to find some private ownership group would have been financially beneficial, but they didn't do that because no one would have taken on GM at that time. You'd have been insane. You're not just buying GM, you're buying their future liabilities as well.

GM is massive, and had significant liabilities with pension and healthcare costs that made a private takeover basically impossible. GM's bankruptcy was $54 billion. This isn't a billionaire buying their hometown newspaper to keep it afloat, GM's assets were significantly diminished against their massive debt and future liabilities. If they couldn't get their loans secured, they were not going to have the liquidity to keep the lights on. Ford didn't face this problem because Alan Mulally right before the recession hit, took out loans leveraged against every company asset as a hedge in case a recession hit, because much like GM, Ford was operating with an alarming lack of reserve cash that wouldn't have been sufficient to keep the production process going if auto sales tanked. They simply did not have revenue to keep the factories running if their monthly revenue declined. Ford didn't take those risky loans for fun, they did it because their operating situation and cash reservers were that dire, that they risked the company's independence to shore the situation up. (EDIT: Forgot to mention that the reserve cash was important because they were at junk grade so non-secured loans were both not offered by banks because the company had no feasible repayment plan, and the interest you'd have needed on the bank side to make the loan risk worth it would have made such repayment impossible. Beyond that, not only would the loan be risky, on the bank side, you're not exactly swimming in cash either in fall 2008, so you're absolutely not loaning GM that money and waiting to see if they can pay you back for a 9% profit over 5 years.)

Ford supported the bailout of their competitor, because GM totally going under would have been an H-bomb on the parts suppliers, which is also a secondary issue with the "someone will buy GM and bring it back" idea. Once the factory that makes a very specific type of o2 sensor goes under because GM was 55% of their orders, it's not like that infrastructure will sit their waiting for your GM v2.0 to pop back up. If GM went under, Ford likely would have gone under next, because they share a number of part suppliers that would have ceased operation without GM orders.

I've owned a Chevy Cruze that I liked, I think GM makes a number of good products (and some horrible products!) but they were going to go under if they couldn't get a loan to provide them operating revenue after auto sales tanked.
 
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