Since the United States is part of a global economy, should other countries help bail out failing banks?

No

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by Deone Doctors

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In his book, "Rich Dad, Poor Dad" Robert Hiyosaki claims that nine out of every ten businesses fail within a year. For those that make it over the first hump, an additional nine out of every ten fail within the first five years. The relevance of these two simple facts to the question isn't as murky as one might think. A bank, like any other business, is privately or publicly owned. It is not government owned. Therefore the government shouldn't be on the hook when the banks are failing within its own borders. The government does not step forward and intercede on behalf of the majority of the other privately owned businesses that fail, why should the banks get special treatment?

It is not simply a matter of capitalism versus socialism either. There are definitely arguments that could validate government intervention. In the case of the United States recent recession and economic bail-out solution approved by congress, there were legitimate fears that had the giant savings and loans (SNLs) and banks gone under, the economic impact would have been a disastrous catastrophe. Then again, in business even more so than everyday society, Darwinian principles not only apply, but absolutely govern the structure and hierarchy of corporate America.

If these goliath sleeping giants of companies are no longer able to perform and maintain at least operating costs and have to beg for help or shutdown, than perhaps instead of looking to the government they need to look inward and see that there is something seriously dysfunctional about giving some CEO's several million dollars in bonus' on their way out. What other aspect of society, business or otherwise, rewards failure so generously.

Of course how much of this was hype, or speculation, or fact no one really knows. But one thing is relatively certain, whatever the outcome, the American economy would bounce back, eventually. History bears this down to be true.

As it stands, the bail-out plan was approved. On the second try, to the tune of 850 billion dollars. Thats a lot of Double Cheeseburgers, America. In fact, it's more cheeseburgers than we have to give out. We can't rely on other countries, most with coffers much too small and inadequate by themselves to even sustain our economy for an additional 24 hours.

As for the large countries whose economic status could leverage them into a position to help us, well I simply don't think thats a precedence we would want to start. The future implications of that course of action could cripple us, even assuming our economy and banks bounce back soundly.

Still with me? Well, imagine, we can't afford to get ourselves out of this huge slump we seem to be in. Now lets say China's booming economy continues to steamroll ahead for the next 20 years. Meanwhile, we pull ourselves out of the muck and return to our former beacon of international finance. Then China, a fledgling economy even that far into the future, has one of the problems any of the other markets have had when bottoming out. America's Great Depression. Japan's housing bubble collapse, or even the recession America finds herself in today. The cost to do a similar bail-out plan for them would most likely be well over 1.5 Trillion when indexed for inflation, and that is a moderate estimate.

We can't afford to bail ourselves out... how can we expect someone else to bail us out? For that matter, how could we possibly even conceive the idea of being able to afford to bail others out of the same neurotic mistakes our corporations have been responsible for?

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