To Bail Or Not To Bail: A Simple Question Of Math; And Why Taxpayers Will Be On The Hook Until The End

Tyler Durden's picture

When it comes to rescuing an insolvent country, continent, or entire financial system, at the end of the day it is a simple question of maths: is "doing it" cheaper than the alternative. Recall that the IIF was heaping fire and brimstone on bondholders and threatening the world with $1+ trillion in losses if bondholders did not comply. That nobody has any clue just what said costs, and opportunity costs, are, does not matter: the status quo must be preserved at all costs. And the status quo is one of avoiding private losses at the expense of taxpayer capital. Enter Credit Suisse with its back of the envelope analysis of the cost of not bailing out Europe's insolvent PIIGS, and the (taxpayer) cost to "save" them.

Needless to say, it is a foregone conclusion that according to CS' back of the envelope analysis, not rescuing peripheral Europe would cost at least €681 billion - much greater than the cost to bail out the PIIGS at €627 billion. What is not noted, however, is who bears the costs. Obviously, in the first case the costs would accrue to the banker cartel; in the second one it is simply the taxpayers who have to keep funneling over their hard earned pieces of worthless fiat. As such one can make the argument that if even €1 of bankster money was at risk, it is irrelevant how much money taxpayers would stand to lose - whether it is €1.01 or €1 quadrillion. After all, this is merely "money" that can be printed, either overtly, or covertly (via LTROs) by the appropriate central banks, a process that would then be funded by more public debt issuance, and further enslavement of future generations of taxpayers. Unfortuntely, the latter is not the bankers' concern. They have a few years to get rich, and to a deportation-free country. Everything else is noise. Which is why until the very end, many more trillions in fiat will be thrown at the altar of Moloch before there is nothing left.

Cost of no bailout:

Cost of bailout.

Bottom line: the math doesn't lie. As for everyone else? That's a different matter entirely.

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ArkansasAngie's picture

It matters to me ... And I'm not happy about whom they are selecting as the winners and losers.

redpill's picture

If it comes to it Ben will bail out every single banker in Europe if he needs to.  I mean, all the little folks and pension funds are fucked, but just as long as the "financial systemic risk" is reduced that's all that "really" matters.

It's amazing people will endlessly bitch and moan about the inherent corruption and criminality of our current system, yet at the drop of a hat they will drool and nod when some central banker stands up and proclaims the systemic financial turmoil must be avoided at any cost*

*any cost meaning everyone bails out the system they claim to hate


Sweet Chicken's picture

It's amazing people will endlessly bitch and moan about the inherent corruption and criminality of our current system, yet at the drop of a hat they will drool and nod when some central banker stands up and proclaims the systemic financial turmoil must be avoided at any cost*

*any cost meaning everyone bails out the system they claim to hate



Holy fuck shit cocksucker that simple truth makes me want to scream! Can we hang these mother fuckers yet!?!?!?!?!?!

leathaface's picture

*any cost meaning everyone bails out the system they claim to hate

"We had to abandon the free market to save the free market?"  Fuckin morons

MillionDollarBonus_'s picture

This is not a question of math. This is actually a moral issue. Is it right to let systemically important financial institutions go bankrupt, which will decimate the economy and harm many future generations? Or should we protect our children's futures by saving institutions that are simply too big to fail?

lunaticfringe's picture

Retard, troll, and don't forget...shitstain.

Fedophile's picture

It will always be cheaper for the bankers to have the tax payer bail them out.

economics9698's picture

What is good for the children is declaring bankruptcy, arresting politicians and bankers who ran up the debt, and moving on.

Moving on would include 100% fractional reserve banking, gold/silver.

bankruptcylawyer's picture

as much as i have to agree that MDB"s antics have been less funny over time, i still do enjoy the fact that his comments RELIABLY solicit responses. i mean, if you are responding AT ALL, you are the one being punked. this is why i read the responses to his comments, because he is making fun of you. ( and us of course ) . 


anyways MDB, i miss the days when your sarcasm was dripping with disgust. you're playing to nice for a while now. it's getting staid. up your shit up. 

lasvegaspersona's picture

you are both wrong MDB is the entertainment...he just needs some stage time to hone his act...

krispkritter's picture

MillionDollarRetrolltard...I used to think noone could be that stupid(except on purpose), I was wrong:

Schmuck Raker's picture

'Yes' to the first question, 'False' to the second.

TruthInSunshine's picture

People get the bankers who own the politicians that they deserve.


bjfish's picture

Hey million$ idiot:  Do your children understand that their share of the bill is $100,000 each (plus interest)?  How's that for protecting their future! 

Selling out our children's future is morally reprehensible.  So you were right about one thing; it is a moral issue.


HardlyZero's picture

BBBut...if my children stand on my expanding bubble and their children stand on their bubble....our family of bubbles will achieve lightspeed and when the google bubbles explode everone on the furthest out bubble will escape the monstrosity.  Plan ?

Beam Me Up Scotty's picture

Isn't immoral to make future generations debt slaves from cradle to grave?? All so you can live like a king ?

The Navigator's picture

Not only immoral but illegal. You cannot legally enforce a debt on a newborn just because they were born in the "wrong" country - 20 years ago, that wrong country would have been Bangladesh, India, China.

What will the Bangladeshi's parents say 10 years from now - "finish your rice, think of all the starving kids in the USSA?"

WOW, how our world has changed in just 1.5 generations.

Travis Bickel's picture

Agreed MDB. Everyone should ask yourself one simple elegant question: "Is it good for the children"?


MeelionDollerBogus's picture

is it right to label any institution as financially "important"? Isn't that really impossible? If one company was so important the economy depended on it, it IS the government and shouldn't be a company.

If it's a real company then it should not ever be so important that we all depend on it. Can't have it both ways.

The biggest decimation to today's economy is to rob the economy to feed the failed banks. They merely consume money & produce instability and crime. No benefit to society whatsoever has resulted. None.

Bank accounts & pensions go empty, houses are stolen using forged documents then re-sold illegally. That's what the bailouts paid for. "too big to fail" = big enough it should be killed right now.

The moral answer is the math answer: kill too big to fail. Kill JPM. Kill goldman sachs. Kill Bank of America. Kill them NOW.


ClassicalLib17's picture

@MDB,  That's pure gold!   No one can write like you when you are on your game.  You are truly an inspiration.

Caviar Emptor's picture

But but but....I Thought We Made A Profit From The Bailouts!!!!

oldman's picture


you got enough rope for six billion of us?             om

pies_lancuchowy's picture

redpill - I masturbate in awe of your being so fcuking right on the spot. Well said.

csmith's picture

Exactly...the question is WHO wins and stays wealthy and powerful, rather than how much money is involved.

SwingForce's picture

Me neither, where should I move to? Canada, Iceland, or Costa Rica? What about Panama? Screw these bankster bastidz and the politicians, I'll never see my Social Security. If I get a job, I'm just paying into the mess, I need to keep all the money for me- that's why I cut lawns for $10/hr CASH all mine. I'm getting ready to pack my bags becuz it doesn't look good for a Dr. Paul win in november.

CynicLaureate's picture

Where exactly will you move to?

Why would that new country want you around?

When things go bad in the new country, you'll be the new scapegoat, and your property will be redistributed to the people.


Extra credit: do the Mexican drug cartels charge more for protection than the IRS takes every year? Habla usted Español?

SwingForce's picture

Good questions, but be sure the IRS will up their collections by a big amount. $Trillionz to the Banksterz means $Trillionz on the back of ME! Fuck it, I didn't co-sign that loan. Politicianz & Timmay are Robo-signing MY name on every new TBill auction, I don't like it. Thanks for your thoughts, ZH is the greatest.

johnnynaps's picture

Unless you have knowledge worthy of cartel protection, you are screwed!

AUD's picture

Remember though your cash is the credit of its bank of issue. The 'collateral' for its credit is all the low quality financial 'assets' that you complain about.

oldman's picture


Ask your mommy and daddy or have they already left the table with the bill due to ' go to the bathroom'?

I see you people everyday coming here to eat for free in the third world with your arrogant gemands that the locals learn english and adopt all of your old broken dreams

Sorry, friend, I don't even know you or your parents, so it is nothing personal. It is just that I have been in the middle of an invasion, a plague, of americans lately, all asking the same question.

 my answer is the same to each: Go home and clean up your mess and pay for your meal. Don't be a deadbeat, settle your account

Yeah, twenty-three days trapped in a place invaded by the locusts from the us of a----all with the same quiestions and ugly to boot.

Oh, no, not to look at----just ungracious and mean----stay home--you can fix it up                            om

Total Collapse's picture

$1000/oz silver, here we come...

LowProfile's picture

Gonna have to be more like $3666 if the GSR reverts to 1:15

jmcadg's picture

Was listening to a round table podcast with David Morgan and Eric Sprott. DM said Jeff Christian admitted at one the silver summits to not 100:1 paper to physical, but 400:1 Lol
Back of fag packet $32 x 400 = $12800/oz of PHYZZ
I just shit my pants ... and enjoyed it!

Troll Magnet's picture

shit...if silver goes to 1,000, i'm buying me a country and make it completely free. y'all are invited!


HungrySeagull's picture

1000? HAH!

oh wait... Doodles figures on tea pad...

That there is Freedom!

It would be something to drop a coin or two of Gold or several more in Silver onto the table and say here. It's padi up. (More than likely it will be electronic... but oh well..)

Stax Edwards's picture

Hey TD, ZH comments appear to have gone well beyond tongue-in-cheek humor and fringe lunacy to full on retard.  Enjoyed the fun while it lasted, but it appears the readership has devolved to those primarily seeking waffle irons from WM at a deep discount.  To those I have the following advice: Beware of competing WM shoppers brandishing pepper spray.  Carry on.

akak's picture


Hey TD, ZH comments appear to have gone well beyond tongue-in-cheek humor and fringe lunacy to full on retard.

If you happen to be speaking about MillionDollarAnus, AnAnonymouse, JimmyJames and Sandoz --- oh, and StaxEdwards --- then I wholeheartedly concur.

HungrySeagull's picture

Sorry, I am conceal carry and treat pepper spray as a attack that fits a criteria for a draw.

Kinda interesting that we hardly ever go to wally these days. Don't really need to.

Antipodeus's picture

"Never bring pepper to a lead fight"?

SwingForce's picture

Don't forget, you need somebody with that $1000 in cash to buy it from you.....good luck!

hack3434's picture

Looking at AAPL and all the iTrash goes to show that anything is possible. 

SwingForce's picture

Well, think about the stupid people that give up their cash- how does 1/2 oz. of Silver stack up to an iPad3?

hack3434's picture

How does a piece of paper (if you asked for certificates or whatever) that says"1 Share of Apple" stack up to a 1/2oz of Silver? Besides, that's a US-centric view of the i-Mania. Some people out there still like to save (iDollars for now...) and tech savy people go with Android which is hands down a much better and open source platform.

HungrySeagull's picture

Don't you worry. Ive seen last years asks and bids that were in the amounts bordering on fantasy (And getting executed and traded all done too...)

When the time comes, you smile at the bank, or the bank smiles at you.

All the same, need a dishwasher. I can probably hire someone to do it manually the right way instead of paying the same sum for a pos energy star crap that will burn up a year from now.

bobola's picture

The ultra-wealthy will be trading their worthless fiat for silver, gold, land...???


SnobGobbler's picture

nah they already have all that, good thing hookers and blow never gets old.