The financial crisis was probably extremely dire.
The basic Liberal theory says that when a big player goes down, it's good for the market, because many smaller players will fill that gap. What is happening the last years throughout US and Europe is that when a bank goes down, the state turns communist and we share the losses.
If the bank has huge earning, it's capitalism, so they can keep it because hey they worth it!.
Joseph Stiglitz has an entire book on the subject. As Krugman said - and the economist also... go figure! - Obama should have put at least some rules to Wall Street giants when they were on their knees, not after he made them twice as big.
Blah, I am not sure if the Congress or Obama CAN actually do anything to regulate WS giants at all.
"But we don't have dragons in Idaho", they'd say.
To which of course I replied: "See how effective I have been?".
Plus, besides the disregard for the burden-of-proof in your argument, wasn't the economic crisis caused "as a result of the FED's actions" in the first place (deregulation etc)?
Deregulation was Congressional action, not action of the Federal Reserve (usually referred to by the shortened form, "the Fed").
That's the "law passing" part. But the advisory part has Fed written on it:
"In Congressional testimony on October 23, 2008, Greenspan finally conceded error on regulation. The New York Times wrote, "a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. ... Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken."
"By dialing rates to near zero, Mr. Greenspan made it cheap to lend. It was natural for the banks, a greedy lot to see that they could borrow money at low rates and lend it out to customers at higher rates."
"As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time."
This is why I'll never vote libertarian.
And is not about moral ideology, it is pragmatic to take the view that declaring organisations as too big to fail, bailing them and then letting them carry on as before is pretty stupid. That's not running an economy, that's making excuses for an abusive relationship.
So... even with the massive bailout, the majority of average people got hit pretty hard, and many are still recovering as their regions try to fight back from the economic collapse, while we read about bankers bitching that their bonuses were only in the single digit millions for so many years.
The FEd had full powers to ask that any bail out remove current bank leadership from power due to the threat of full Gov receivership of those banks by Fed..we were sold the idea of giving a free get out of jail card to banks based on lies