I’d rather see Citibank declare bankruptcy. How are we going to have a healthy banking system if we pump taxpayer money into banks that mismanaged themselves into insolvency? Why not just shoot the mortally wounded and move on. How does keeping Citibank on life support help anyone?
I keep hearing that banks and other institutions need to deleverage themselves to be healthy in today’s economy. You don’t deleverage a bank by having it write new loans. Maybe we need some new banks that are adequately capitalized and conservative in their business practices.
You make it sound like industries are ‘Blue Collar’ or ‘White Collar’. That’s ridiculous. There are thousands of white collar jobs at GM, Ford and Chrysler.
gonzomax What you’ve been saying has been sticking in my craw. There is a fundamental flaw in your argument. Basically you are appealing to emotion, you are appealing to the sentiment of the noble blue collar workers in Detroit.
Here’s my prognostication for what it’s worth.
Bailout or no bailout, GM lays off 50,000 workers and moves ahead with plans to build a plant in Brazil.
How many blue collar workers are there at Citibank?
We bailout every financial company. They caused the mess we are in. They looted the system until they crippled it. They were allowed to buy up banks until we now believe they are too big to fail. They are gobbling up tax money at an incredible rate. They are stripping jobs as they do.
The boards are still there. The mismanagers are still there. The thieves are still there. The low level techs and secretaries and brokers…gone.
We have to go after those who caused and profited on the financial mess .
Every big ticket item manufacturer is hurting. Credit is hard to get. Leases for autos are more difficult to obtain. House purchasing is at a standstill.
The auto problems have been exacerbated by the finance companies. Their plans for the future may have been doable if the financial companies did not bilk us.
Here’s an article from Time Magazine that explains why economists have been so eager to bail out banks, and so reluctant to bail out auto companies.
I don’t know if I buy it, but here’s his explanation:
“There’s one valid reason why we’ve done so: Banks are different. Their health affects every sector of the economy, and there’s now widespread, if not universal, agreement among economists that a breakdown of financial intermediation–a.k.a. banking–was the main cause of the Great Depression. Also, banks are susceptible to panics in a way that other corporations are not. If everybody gets freaked out enough, they can fail even if they are profitable. That’s why we have a long history of government involvement in and regulation of the financial industry. None of these special conditions holds for automakers, so their aid requests should be held to a different standard.”
It is a weak argument. The auto companies are into many aspects of our economy. That includes banks.
The economic comeback for the economy depends greatly on jobs. Losing a couple million jobs would be a huge blow .
Yet we are not dealing with the base problem,foreclosures. It was what we said we would do with the bailout money. We have not. we have just bailouted the financial gurus who robbed us blind. The logic of dealing with foreclosures was clear. It was a solution. But the bankers just could not resist gobbling up more money. The money has not fixed the problem. That is obvious. Paulson deciding to not buy the assets was a big blow to finding the bottom. Local banks will be going down at a fast and furious pace in the near future.