Economic Bailout Case Study

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Ethics of the Economic Bailout White Collar vs. Blue Collar Jobs Jeremy Bardin Dan Covelli Gavin Defreitas James Malvasio Matt Olson Dan Speer On 01 October 2008 the Senate debated and approved the Emergency Economic Stabilization Act of 2008. Two days later the House of Representatives voted to enact the aforementioned bill, and with President Bush’s signature, introduced a $700 billion Troubled Assets Relief Program to purchase failing bank assets. In the shadow of such a momentous occurrence, the struggling automotive industry, desperate for some form of assistance, approached the United States Senate in November with a plea for help with their financial crisis. On 19 November the heads of the “Big Three,”…show more content…
The events leading to this notable and heavily debated “bailout” are varied and disputable. Beginning in mid 2008 there were several important indicators worldwide foretelling a likely economic crisis. Some indicators included high oil prices, which led to both high food prices (due to a dependence of food production on petroleum and using food crop products such as ethanol and bio-diesel as an alternative to petroleum), global inflation, a substantial credit crisis leading to the bankruptcy of large and well established investment and commercial banks in various nations around the world, increased unemployment, and the possibility of a global recession.[4] Furthermore, the United States entered 2008 during a housing market depression, a sub-prime mortgage crisis, and a declining dollar value. In February 63,000 jobs were lost (a 5-year record) and in September 159,000 jobs were lost, bringing the monthly average to 84,000 per month from January to September of 2008.[5] During the month of September the sub-prime mortgage crisis reached a critical stage, characterized by severely contracted liquidity in the global credit markets and insolvency threats to investment banks and other institutions.[6] In response, the U.S. government announced a series of comprehensive steps to address these problems. What followed has been a series of "case-by-case" decisions to intervene or not to intervene such as the $85 billion liquidity resourced for American International Group (AIG), the federal takeover of Fannie Mae and Freddie Mac, and the bankruptcy of Lehman

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