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What is a bailout?

by on March 18, 2013
image from ghananewsagency

(pic from ghananewsagency)

When traders “bail out” of a certain stock, that stock is less in demand, and the share price plummets. Depending on the extent of this disaster, which can occur at any time, major banks may be affected.  That’s when the calls for “bailout” are heard.

Are they loans, are they a gift? Under what conditions are they given? When the IMF gives a country an emergency package, there are usually certain conditions attached. And with our big bailout?

How is it possible that banks can demand huge sums of money, and never have to answer for it? In a nutshell: too big to fail.

This will go on and on, as long as our systems of
– creating money
– destroying money
– and our payment systems
are linked to the fate of major banks.

Also, it’s proving extremely difficult to separate investment banks from institutes that should simply keep our money safe. That is in part because as soon as we give our money to a bank, technically, it already is an investment. It belongs to the bank, until we want it back, and if it gets lost in the meantime…well: another excuse to ask for government bailouts!

The only good thing about the wording is that “to bail someone out” indicates a crime was committed. Bail is what someone accused of a crime has to pay, in order to leave prison until his trial. Unfortunately, the major banks and money-creators are not only too big to fail – there’s also too big to jail!

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