Quote from: justusranvier on March 26, 2013, 01:55:47 PM

Quote from: caveden on March 26, 2013, 01:38:16 PM

And stop saying BS, please. These banks are going down, some people are going to lose money. Better it be those who invested in said banks than tax-victims who had nothing to do with the problem. Even worse would be forcing all EUR holders to pay.
Of course, for the 100th time, the bank shareholders should lose all, they should not be saved at the expense of their clients. And ideally those who made riskier investments should be cut before those who simply held checking accounts. And every creditor or client of the bank that loses something should receive a proportional share of the bank's assets in return.

There used to be this story called a "capital structure". According to this story every stakeholder in a company was assigned a certain preference so that if a bankruptcy was to occur the losses would be felt by the different classes of stakeholders in a pre-defined order. People who believed this story used it to calculate risk. Some people decided to accept a lower return in exchange for a safer position in the capital structure, other people decided to take a less senior position in exchange for a higher return. Everybody made their decisions based on the idea these rules would remain objective and unchanged.

Then 2008 happened and reality decided to tear down this pretty little fantasy. Much to the dismay of the investors stupid enough to believe in the "rule of law", the way it actually works is when a bank becomes insolvent the losses are eaten by the group of stakeholders who have the least ability to bribe the regulatory and lawmaking apparatus. Your actual position in the capital structure depends on your political clout at the time of bankruptcy. Congratulations, you just learned an expensive lesson in what it means to live in a centrally-planned command economy. Welcome to fascism.

+1

Please see USSA bailout of General Motors for reference.