Charles Edison

"Economics, politics, and personalities are often inseparable." - Charles Edison

Wednesday, January 19, 2011

Wells Fargo Meets Expectations of Increased Profit

An article in Daily Finance discusses Wells Fargo's increase in earnings and paid back loans. It received a bailout from the government during the financial crisis and was able to pay all of it back, plus increase its overall performance. This showcases the benefits of the mixed economic system the U.S. uses. To review, a mixed economic system is one in which the economy is driven by competition and self interest, but government intervention (for things like bailout money and health care) are allowed. Without government help, Wells Fargo may not have been able to make so much progress. Granted, not all businesses bailed out by the government were so fortunate, but Wells Fargo is a great example of those who were. If it was left to fend for itself, the country could have seen the loss of one of its major banks, and some very unhappy people as a result. Government aid in the financial crisis not only helped out businesses, but also the people who lost their jobs as a result of the bad economy. Without at least a little help from the government, the United States would probably be in much worse shape than it is now. Too much intervention, like in a command system, isn't ideal either, but a market economy has no government influence at all. The Unites States' mixed economy is a happy medium that allows for a lot of growth, but also for recovery when that growth declines or stops altogether.


Smith said...

There are a lot of Americans who disagree with the bailouts. Why do you think this is? What could have been done alternatively to help the banks?

Alison said...

From what I've read, it seems like a lot of people oppose the bailout of banks because they feel like the government has ulterior motives. In an article from Information Clearing House (link below), it is expressed that there are some people who think the bailout is a way for the government to exert influence over the economy that would not be able to be acheived under normal circumstances. They believe that the government will get greater power to set interest rates and control access to credit.
I honestly don't think that there would be a feasible alternative to bailing out the companies. In order to avoid a collapse and another serious depression, the government really didn't have another choice.

Garrett T. said...

That's great that Wells Fargo has paid back the debt. Why don't banks who have been bailed out follow their example? Whatever they're doing, they're doing it right. I agree with you on that one Alison, that government intervention for times like this is a good thing, but also at the same time a bad one. It really depends on who the government bails out. If companies all did as well as Wells Fargo then people wouldn't be disagreeing with the bail outs. But because there are those who don't do as well or choose not to do so, half the time the bailout is not worth it.

Curt said...

I agree with Alison that the mixed economy system in America is a happy medium. I also agree with her that there doesn't really seem to be an alternative to bailouts. They seem to be the only thing that would work in situations like the one Wells Fargo was in. I do see what Garrett is saying though, if a company decides to ask for a bailout, but then they can't pay back their dues, they're in an even deeper hole than before.