Big Fail Title a Recent Book a

¶ … Big Fail" title a recent book a movie HBO. It refers bailout major financial institutions began 2008, time concern,, United States fall a depression aid. For purpose discussion I include bailout General Motors Chrysler. Too big to fail In the second half of 2007, the real estate sector in the United States of America showed the first signs of weakness. Devaluations were gradually observed and the investments made in the field came to lose value.

The problem was mainly represented by the fact that the population did not afford the properties, but the financial institutions had traded in money as it had already been reimbursed. The bubble eventually burst and the financial institutions were the first to suffer the major hit. In Too big to fail, the focus falls on the bankruptcy of Lehman Brothers, based on the recurrent assumption that it was this bankruptcy which onset the unfolding of the crisis (Weiner, 2009).

A notable theme in the movie is represented by the struggle of the Secretary of Treasury (Henry Paulson) to avoid the bankruptcy of Lehman, but the eventual decision to let the institution fall, with the lesson that the bankers are the ones who created the problems and it was their responsibility to fix them. The message was that the government could not rescue the banks from their mistakes. As Lehman went bankrupt however, it inescapably impacted the rest of the banks.

To avoid the crash of the entire banking system, the United States Treasury adopted a plan to nationalize the banks by providing them with capital. In time, they also decided to purchase their toxic assets -- under the Troubled Assets Relief Program (Investopedia, 2011) -- and to expand the financial aid to the automobile industry as well, the largest recipient being General Motors and Chrysler.

The decision has been highly disputed and a universal conclusion has yet to be made; it is in fact mostly probable for a consensus to never be found. And this is due to the complexity of the problems, giving reasonable strength to the arguments on both sides. In this order of ideas, the intervention of the government is supported by the fact that its absence would have ruined the economy of the United States. Without the capital injections and the TARP, the entire financial sector would have been brought down.

As Too big to fail points out, the federal institution has only decided upon the $700 billion bailout program when AIG was threatened by bankruptcy. The large corporation has operations and services in all fields. Virtually anybody with a 401K plan would have been impacted by the fall of AIG. Millions of jobs would have been lost, investments would have been lost, consumption would have decreased and a chain reaction would have been set in motion.

And these effects would have been obvious not only in the United States, but at the global level as well. The Secretary of Treasury was as such pressed by the players in the international community as well, including the current Director of the International Monetary Fund, former Prime Minister of France Christine Lagarde. In this setting then, the decision of the federal institution in favor of the bailout seems responsible and the lesser of two dreadful solutions.

Still, the bailout was criticized as it further fuelled the arrogance and lack of responsibility, accountability and transparency on Wall Street. It was granted without a real legal background and it did not create an integrated framework for the entire threat of the economic recession to be addressed in an efficient manner. It virtually sent.