Here we go again? Will Greece be bailed out again or won’t it? Just last year, the International Monetary Fund (IMF), and European Central Bank (ECB) supposedly bailed out the European nation. What happened between that time and now that makes this country need another restructured bailout? What will happen if the Greek people do not want to accept the terms that the central bankers are laying out for the country. Obviously, the Greek people are against all of the new conditions that are being presented to the country. What are the options if the Greek people do not accept the term of the new restructuring deal that will be laid out before them? The only alternative will be bankruptcy. Do central banks allow countries or large corporations to actually go bankrupt anymore? In 2008, countless banks, insurance companies, and large corporations were bailed out. Now countries need to be bailed out. Will some of the states in the U.S. need to be bailed out soon?
Is anything allowed to fail anymore? Since the 1980’s, large companies have been bailed out and we can only wonder if we would have all been better off if these institutions were allowed to fail. In the past 30 years, we have seen the savings and loan bailout, the Long Term Capital Management bailout, ‘too big to fail’ financial bailout, and now the people face the bailout of Greece, Ireland, and Portugal.
When are these bailouts going to end? Isn’t this the reason why we have bankruptcy courts? Capitalism is a system in which a country’s trade and industry are controlled by private owners for profit. When a company or country fails they should go bankrupt. The system is supposed to reward the prudent investor not the foolish one. Bankruptcy or insolvency is a legal status of a person or an organization that cannot repay the debts it owes to its creditors. Is everything ‘too big to fail’ these days? What ever happened to capitalism? Below are a list of the bailouts throughout the past 40 years. You will clearly see how this looks like a growing epidemic.
1975 New York City Bailout $8 billion
1980 Chrysler Motors $1.5 billion
1984 Continental Illinois Bank $34 billion
1986-95 Savings and Loan Scandal $124 billion
1995 Mexico $50 billion
1998 Long Term Capital Management 3.6 billion
1998 Russia $17 billion, Russia later defaulted on the debt
2001 U.S. Airlines $15 billion
2008 Credit Crisis $700 billion and possibly more