US Bail Outs in 2008 Were Loans. Not Grants. People Actually Made Money!

[BTC Turkiye]

I want to get you guys perspective on this claim I just heard from someone that it says...

"Bailouts in 2008 were loans and not grants. All those companies paid those loans back with interest and Americans made money at the end"

I didn't know those were loans
I didn't know those had interest on them
I didn't know those companies paid those loans back

Is that true? Can someone comment with some solid knowledge on this?


Now, I want to mention again that this's not my claim and I'm all for Bitcoin and it's movement (reason)

[jackg]

Banks sold toxic assets to the governments but the governments oversaw the creation of those assets to a degree imo so it was a failing all round.

I *think* my government are giving wages as grants but company funds as loans which is a little rediculous since some people will still make more than doctors and such even though they're doing no work...

[joniboini]

Found this article: https://www.investopedia.com/articles/economics/08/government-financial-bailout.asp.

I wouldn't call it 'people made money' because in the end inflation and shit happens.

Meanwhile in UK: https://www.independent.co.uk/news/business/analysis-and-features/coronavirus-bailout-business-banks-rishi-sunak-financial-crisis-covid-19-a9407691.html.

[BTC Turkiye]

So from what I see above, those bailouts WERE loans and they WERE paid back to the government by those companies

Am I seeing this right?

[figmentofmyass]

So from what I see above, those bailouts WERE loans and they WERE paid back to the government by those companies

Am I seeing this right?

technically yes. https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation.

like joniboini said though, inflation renders the whole thing bullshit. TARP was just one of multiple programs bloating the fed balance sheet and expanding the money supply far beyond real growth. as a result, we are now paying 20% higher prices on everything despite wages barely rising at all: https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100&year1=200810&year2=202002

[Sadlife]

Yes that really happened but the interest rates we're lowered at that time because people and corporations doesn't really know that the financial market was about to collapse, so they've lowered the rates to attract people into buying, investing and loaning money.
But right now, even if they lower the interest rates no one's gonna buy again at their scheme cause we already have the internet.

[beerlover]

Lol, you do realize that when you give that little loan and make that little amount of money, you are in the end losing money actually because of inflation right? Or you could have invested into something else and make even more money.

Even spending that much money into education, healthcare, infrastructure and other vital stuff in the world you could have over long term make more money from people you educate well enough to go into work force and make money for the nation, for people who would normally work and help the economy with their taxes but can't because of their health issue or going bankrupt, people who wants to go to work or school but because of bad infrastructure they can't and far away.

Basically that "loan" that government "made money" could have been made anywhere if they wanted, but they picked bankers. Nobody should forget that banks actually gave themselves HUGE bonuses after the 2008 bail out, that's where your money went, for the CEO to buy a super yacht.

[abhiseshakana]

The bailout is done in the form of a government that will buy bad Subprime Mortgage (SM) debt securities held by financial institution investors, such as banks, mutual funds, pension funds, and insurance, at the prevailing market prices. While the Bailout funds obtained by the Government from the issuance of government debt in the money market.

This bailout scheme is very doubtful because it does not solve the main root of the crisis, namely the problem of defaults on customers to SM companies, the oversupply property market, and the value of the property which has plummeted so that SM is unable to pay its obligations to financial investors.

The property/house debtor also does not seem to get much benefit from this bailout because the installment obligations with market interest still apply. Relief is only in the form of leeway in the criteria for confiscation by the creditor if the borrower is unable to pay its obligations.

Investors also feel a large loss that has the potential to erode capital resulting in insolvency, which has negative equity problems if no new capital injection is made. So that the surviving investor does not sell his debt, and the homeowner is still unable to pay his obligations and SM as the debt issuer is unable to pay the interest coupon.

While the form of the bailout from the American Government to investors is a loan by taking over the majority shares of several companies and financial institutions that lose money in the US capital market, to save financial institutions and banks in order to prevent a prolonged economic crisis.