>The US government could have done something about the banks after having bailed them out without wreaking havoc, but they didn't.
That's exactly what's under dispute, especially given the multiple meanings of the term "could" here.
The problem with paying the Danegeld is (among other things) that the extortionist becomes more capable; that means it's less true that "we 'could' shut them down".
In this case, it means the banks have bought time to extend their influence, get more people to expect them to be around forever, borrow bigger amounts of money on the assumption that they can't die, make more acquisitions on the assumption of returns to TBTF status, make politicians more dependent on their campaign contributions, etc.
It's the exact mentality that "oh, they won't call our bluff because Everyone Knows that would be reckless" that allows this abuse to exist in the first place.
And what's worse, having given in, you now have to worry about non-bank orgs similarly positioning themselves!
There's a reason people have to be taught about the dangers of the Danegeld: because they all think they can just "fight for real later".
That's exactly what's under dispute, especially given the multiple meanings of the term "could" here.
The problem with paying the Danegeld is (among other things) that the extortionist becomes more capable; that means it's less true that "we 'could' shut them down".
In this case, it means the banks have bought time to extend their influence, get more people to expect them to be around forever, borrow bigger amounts of money on the assumption that they can't die, make more acquisitions on the assumption of returns to TBTF status, make politicians more dependent on their campaign contributions, etc.
It's the exact mentality that "oh, they won't call our bluff because Everyone Knows that would be reckless" that allows this abuse to exist in the first place.
And what's worse, having given in, you now have to worry about non-bank orgs similarly positioning themselves!
There's a reason people have to be taught about the dangers of the Danegeld: because they all think they can just "fight for real later".