Jed Rothwell wrote: > Stephen A. Lawrence wrote: > >> Obama's mega plan, and Bush's not-quite-so mega plan before it, >> involved nothing more than transferring a couple trillion dollars from >> taxpayers and bondholders to banks and related businesses. > > "Transferring" is the wrong word. It involved lending the money, at > interest. In the case of AIG the government has taken ownership of 80% > of the company. (In my opinion it should have taken large chunks of the > other banks.)
I'm not so sure about taking large chunks of the banks. I cannot pretend to understand this bailout. However, one thing seems clear: When it looked like Citibank and BOA were going to be nationalized, the stock market went into a full power dive. The stock market is in many ways a giant opinion poll of business people the world over. So, that seems to indicate that business folks in general are scared to death of bank nationalization. That makes me think maybe that wouldn't be such a good path to go down. We need business, and we need a reasonably healthy stock market, which means we need to have the confidence of investors in the economy, just as we need reasonably healthy banks. Something that causes panic in the investor community may be something to be wary of. Nuking the banks has a lot of emotional appeal. But banks are like undertakers -- you may not like them but they're hard to do without. > > In previous bailouts of this nature in the US and Japan all the money > was returned, at a profit to the governments. As much as I dislike this > bailout thing, we should not confuse it with a give-away to wealthy people. > > However in one way it is worse than it looks. The former governor of New > York, Eliot Spitzer pointed that out, here: > > "The Real AIG Scandal -- It's not the bonuses. It's that AIG's > counterparties are getting paid back in full." > > http://www.slate.com/id/2213942/ > > My guess is that everyone knows AIG is done for, so these people are > channeling extra TARP funds to Goldman, Bank of America and others > through AIG. AIG will go belly up and these others will say: "it wasn't > our debt!" The TARP money they receive directly they are obligated to > pay back, as I said. > > I pity the fellow the Feds put in charge of AIG in September. He could > not have known what he was getting into. He seems honorable but he still > doesn't get it: > > http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703019.html > > > - Jed >
