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Unread 29 Jul 2009, 07:30   #25
Tietäjä
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Re: Is Bigger Government Better

Quote:
Originally Posted by Alessio View Post
But the consequences differ in both sectors.
Not necessarily. This is more a vague "usually consequences differ", than a rule. The easy example would go along the lines of, if government is inefficient, it costs excess money to the tax payers. If a company is inefficient, it costs excess money to it's stockholders. Alternatively, is a company is inefficient, the government must bail it out (the list of banks paid US bailout funds includes Citigroup, Merrill Lynch, Bank of America, Goldman Sachs, UBS, Barclays, Societe Generale, Deutsche Bank, and so so; additionally, a while back Bear & Sterns was essentially bailed out complete, General Motors was paid out for). In the case of bail outs, the funds are brought from the tax payers, and it's essentially the same for a citizen whether he pays his taxes to fund public sector failures or private sector failures.

Surely, you can blame supervision for not intervening on subprime, but, had they done that, someone'd definitely yelled: omg communists intervening on our legit banking business. Truth said, the whole subprime crisis and the credit crunch is a follow-up of a private shadow banking sector failure, caused by poor analyzing of risk, combined with gullible consumers.
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