Wednesday, November 11, 2015

Kasich's Silly BankBailout Chatter

John Kasich made an ass of himself with his silly flapjaw about "bailing out" JPMorganChase (inter alia) last night.  (In fairness, the others on the stage missed the super-softball target that Kasich set up for them--which says a lot about the world they live in, too.)

When the question of "bank bailouts/Too Big to Fail" arose, Kasich went raging populist, saying that he would certainly--no doubt about it--"bail out" banks, to protect the 'hardworking folks whose life savings could be lost (fill in the usual rhetorical excess here)....'

John, you blithering idiot:  have you not heard of the FDIC??

Let's back up for a minute. 

'Hard-working Americans' who have 'life savings' can be split into a few different categories.  Bottom-quintile earners have little saved, period.  4th-quintile earners may have savings, and those savings may be largely in banks, but they do not exceed $250K, which is fully insured by the Federal Deposit Insurance Corporation.  3rd-quintile people probably have savings which may exceed $250K--but most likely they are at least partially in 401(k) plans, which are diversified in bonds, stocks, and (some) bank deposits.  2nd- and 1st- quintile people are also (usually) invested in 401(k), but also in other non-bank outlets such as annuity contracts, real properties, stocks, and bonds.  They may have more than $250K in banks--but they're damn fools if they put all their cash into ONE bank.

Sum:  Kasich (and all the others) ignored FDIC.  Why?

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