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#startups #Slidebean #bailouts
0:00 Bailouts – Intro
2:12 Bailouts – When does the government step in?
3:17 Bailouts – Where does the money come from?
4:24 Bailouts – Understanding bonds
7:11 Bailouts – Unconventional methods
9:17 Bailouts – The TARP act
11:03 Bailouts – COVID relief
12:32 Bailouts – Inflation
Broadly speaking, a bailout is to provide financial assistance to an entity about to fail. And yes, in recent history the US government has stepped in a few big times to save the day.
Sometimes the crisis may come from a specific industry or sector of the economy, like the housing market crash of 2008, which ended up blowing up on Wall Street. When the government has to refill the banks and financial institutions with money, to keep the system from going down. That is referred to as a corporate bailout.
It is not a popular move by any means. We’ll explain all about it in this episode of Company Forensics.
Read the video transcription + sources:
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Too Big to Fail: Bailouts Explained
In the financial world, the term “too big to fail” has become a hot topic in recent years. It refers to the idea that certain banks and financial institutions are so large and interconnected that their collapse would have catastrophic consequences for the economy as a whole. This leads to the question of whether these institutions should be bailed out by the government in times of crisis.
The concept of “too big to fail” gained widespread attention during the 2008 financial crisis, when several major banks and financial institutions were on the brink of collapse. Fearing that their failure would trigger a domino effect leading to a full-blown economic meltdown, the government stepped in to bail them out.
But what does it mean for a bank or financial institution to be “too big to fail”? Essentially, it means that the failure of a particular institution would have such far-reaching and systemic implications that it cannot be allowed to happen. These institutions are considered to be so essential to the functioning of the financial system that their collapse would cause widespread panic and destabilize the entire economy.
This raises the question of whether it is fair for these institutions to receive special treatment in times of crisis. Critics argue that the concept of “too big to fail” creates a moral hazard, as it effectively encourages reckless behavior by creating an implicit guarantee that the government will step in to rescue them if things go south. This can lead to excessive risk-taking and a lack of accountability, as these institutions may feel insulated from the consequences of their actions.
On the other hand, proponents argue that the potential fallout from the failure of a major financial institution is simply too severe to ignore. They argue that the government has a responsibility to protect the stability of the financial system and the broader economy, and that allowing these institutions to collapse would be far more damaging in the long run. They also point out that the costs of a bailout are often lower than the costs of a full-blown financial crisis.
So, how are these institutions bailed out? Typically, the government will provide financial support in the form of loans, guarantees, or capital injections to stabilize the institution and prevent its collapse. This can take the form of direct assistance, as was seen in the 2008 financial crisis, or more indirect forms of support such as changes to regulatory or accounting standards.
In conclusion, the concept of “too big to fail” is a contentious issue that raises important questions about the role of government in the financial system. While bailing out these institutions may be necessary to prevent a full-blown financial crisis, it also has its drawbacks and can create moral hazard. It is crucial for policymakers to strike a balance between safeguarding the stability of the financial system and ensuring that these institutions are held accountable for their actions.
As the financial system continues to evolve, the debate over “too big to fail” and the use of bailouts is likely to remain a key issue for policymakers and the public alike. Finding a solution that addresses systemic risk while also promoting responsible behavior in the financial sector is a challenge that will continue to shape the future of the global economy.
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we should be bailing out large corporations, the bulk of the working population are on the small to micro businesses.
Do another video on this to shade light on whats going on right now. The question is – will the Fed & Treasury risk bank failure as a result of rate hikes, or will they stop the hikes even if it means gambling with runaway inflation?
Have reason to believe inflation will stick around for much longer, yet its effects will pale in comparison to what happens if there are unmitigated bank runs.
And these same Capitalist rant how much Socialism is the devil but always depend on the devil to bail them out.
Honestly, if you read the book “All the Devils are here” by Bethany McLean, it explains the extent to which these companies screwed people over to cause the 2008 crisis. And then you had Obama come in with a promise of change, then bailed out all these banks. It really killed any confidence that Americans had on the institutions. It directly led to MAGA.
It's a rigged game by people that will always remain untouched by those disaster. When they win they win big. When they fail, they get bailed out.
In regards to banks – glass steagall
“Rules for thee but not for me”
What people don't understand is that, Wall St fat cats are not gambling and losing all their money. They are gambling and losing all YOUR money! That's why if Gov didn't bail them out, you will wake up next day and found your bank no longer capable to pay back the money you invest/deposit there. You literally only have whatever cash in your wallet and your company close down because all their money can't be taken out from banks. No job, no money, only chaos on nation wide.
I am sorry for being bitter but I really get turn off by some things. I would really be surprised if no one told you about these things: your audio volume is quite low,
Your body language, particular you gestures do not align with your message, and finally the pace of your speech is not even ( really poor). But all the same I really like your content. It's been helping me alot. You are doing a great job. But please improve in the areas that I have mentioned. learn some public speaking.
Thanks
how is it possible for public banks take part in such risky business without any government oversight ?
the banks should serve the public not try to gamble with our money
When they make profit its their profit when they have loss its our loss(Bailout tax payer moeny)
Do that video thing at 8:05
give me a some sheets of paper and I'll show you how to print money
Caya I learnt so much from your Jake Tran collab, I had to come here for more
Inflation does not exist anymore. The US has created more money during 2020 than in the last 20 years. Nothing happend. MMT is real and we are all being fucked by the rich.
the rich protect each other. what's new
I am curious who is behind those nifty acronym. the one with CARE act are geniuses.
Why does it feel like we are applying capitalism to the poor and socialism to the rich?
Why his video soundtrack sounds similar Johnny Harris's videos?
A vide would be nice slidebean
I still don’t understand mortgage back loan even after watching the big short
Basically if you have enough money under your control (including other people's investments and debts) then you automatically get an infinite money printer backing you up
08:08
Please make a video about it.
That bird sound is so annoying lmao
Loved the new sound track 01:58
I understand why people angry about bailouts, but it’s same for example to be angry on doctor during the flight trying to save pilot first on emergency. You’ll get as much support as many people depends on you. If you are on your own you’ll still be on your own))
It was too short for me.
Great vids, but you guys should invest more in the quality of your audio.
Here’s an idea let crappy business or models fail… and abolish the Federal reserve which has always been unconstitutional…
I have learned something today, I have a new channel to watch.
Hey… You should try to show some cartoon animation in the video.
It's better to understand it
Slidebean's exponential upward graph of the level of production and the content is astounding. Cheers to Caya and the entire crew behind these videos! Thank you.
Corporate Debt management is crucial for any Country to develop its country & economy properly.
That’s the reason Bangladesh & China is doing well, even in the COVID Crisis.
Can somebody please share the music name at 1:59 I am trying to find it for so long.