Europe's leaders are meeting to further discuss the Euro-zone debt crisis. In USAmerica, we still have not worked our way out of our own economic woes. Sure, they tell us the market is rebounding, but that seems to be only in the market ~ regular people are still struggling to find work, while the purchasing power of their paycheck continues to diminish. Governmental leaders aren't actually doing anything other than yelling at each other about the best way forward, while bankers' and CEOs' paychecks are through the roof and corporations rake in record profits.
A couple years ago, the government (read: taxpayers) bailed out the banks that were on the verge of implosion, because (the way I understand it in my feeble mind) if they were to fail, the whole financial system would collapse.
So, it seems to me that this is where we stand: banks took big risks with money that belonged to regular people; the risks didn't pay off; the banks, who took the risk, are punished by being given loans so they can stay afloat; the bailed-out-risk-takers, as a result of their punishment, are now making more money than they were before the crisis. At the same time, those of us who didn't take huge risks (those of us who actually funded the bail-out) are rewarded with stagnated wages, a poor job market, and huge concerns about an economic future that doesn't seem to be improving for anyone besides the tremendously wealthy.
More than a couple times in recent weeks, I've heard the maxim 'greater risk results in greater rewards'. What I haven't heard is anyone reminding us of the flip side, which is that with the potential for greater reward comes the danger of greater loss. Maybe it's because if we believe that financial institutions are too big to fail, they don't actually take on any risk of loss. If we continue to be willing to cover their losses, they will continue to manufacture bigger and bigger risk. But it's our risk for their reward. They're not a danger of loss ~ it's the taxpayers and regular people on whom they put that risk.
The thing is, if I've made an investment, I don't mind taking a loss (it doesn't make me happy, but I understood the risk when I made the investment). What I don't like is when I have to take a loss because someone else made a bad investment.
What I continue to wonder is what would actually happen if those banks had been allowed to fail? I hear that our financial system would collapse. OK, this would probably result in a period of panic and chaos.
But it wouldn't last forever ~ so, then what? We'd start over, with something new. And maybe, at least for a while, it wouldn't be so disproportionately unjust.
Meanwhile, in the wake of banks' collapse and financial distress in Iceland, the people have kicked the government to the curb ~ real democracy seems to have momentarily reared its head.