Wednesday, September 17, 2008

Feds: No Taxpayer Bailouts... except to my friends

There is nothing I love more than a "... but that was my last time I'll do it.. promise" approach to spending taxpayer dollars. It's like bureaucrats, Congress, and the President totally forgot that we actually work to send those their way (or that China is willing to spot us just a few more billion everyday).

Treasury Secretary Paulson said on Monday, September 15th, that two bailouts were enough. No more bailouts. Apparently he had already forgotten J.P. Morgan eat up Bear Stearns with the help of our tax dollars but I'll forgive him just this once... So, on Tuesday, September 16th, guess what your trusty government did?

It held its ground! For almost ONE WHOLE DAY! That is amazing. They deserve a big round of applause. Seriously, clap at your monitor, they deserve it! So, this Bush Administration can be boneheaded and completely committed to an unneeded and unwanted war (remember, NO BLINKING!) but can't keep its own promises on our economy for more than a day.

I'm going to let you all in on a little secret... a very shameful, scandalous one: I supported Bush in 2000 (begrudgingly after McCain lost on Super Tuesday) because although he wasn't the greatest mind.. he seemed to be very resolute on keeping government spending down and controlling an economy that was headed in a new direction "up". I thought hey... Republicans love fiscal conservatism. I hope this guy will save our money - keeping it for a rainy day, cut wasteful spending - even on defense, pay down our national debt (or at least some of the interest), and possibly even get Congress to stop spending so much on Pork Barrel projects. Boy, was I wrong, huh?!

So why would the Federal Reserve, Securities and Exchange Commission (SEC), Treasury Department all get together to tell 20 CEOs from the biggest banks in America that after Bear Stearns/JP Morgan, Fannie Mae, and Freddie Mac they were done bailing out companies? Why were they letting Lehman Brothers die although it represented a HUGE 158 year old history of banking? Why were they letting Merrill Lynch go to the wolves? WHY?

Was it because all of a sudden, the Treasury Dept. was thinking? Had something finally clicked in Secretary Paulson's mind? Did President Bush wake from his 7 and 3/4 year slumber to replace his exact double? No. Not more than a 12 hours after sending this strong message to the Financial community, "No More Bailouts!", the Sec. Paulson was at it again. He had just decided it was in the best interest of the nation to spot AIG (American International Group) a measly 85 million... wait make that EIGHTY FIVE BILLION ($85B) dollars in federally insured loans to keep them afloat.

Again.. that nagging question, WHY? Why one company and not the other? Thankfully this all can be answered in one simple revelation. Treasury Secretary Henry Paulson's previous job: CEO of Goldman Sachs. He isn't exactly a balanced and unbiased player in the game. He was once top of one of the most powerful investment banks on earth.. and the majority of his friends (and more importantly, enemies) are still working on Wall Street. So, send a 2-year bailout to AIG.. and let Lehman Brothers (a chief rival) go to the dogs.. I just wished he would have used sound judgement and fiscal responsibility instead of party and personal politics in making these decisions.

Anyways.. Since when did capitalist economies not let companies you gambled and failed, actually fail? Ridiculous.

For a few more comments on the economy that I wrote four and a half months ago, click here


No Bailout: Feds Made New Policy Clear in One Dramatic Weekend - Washington Post


McHow2 said...

Well there is nothing like fairness in the world of business and politics; is there?

Hedon said...

Great post. Thanks. I don't know when we decided that failing was only failing if you didn't have the right connections. Makes me think of Atlas Shrugged.

Strong Moderate said...

@mchow2: Of course I'm not asking for fairness. Capitalism is inherently not fair. Life is not fair. Fairness though should be pursued in these similar situations.. don't you think?

@hedon: Thank you. Thanks for bringing up one of my favorites written by a great author. After some more careful consideration I believe there may have been legitimate reasons to save certain sectors of the economy.. but not for the reasons they were saved by this Administration.

PFBlog said...

The AIG deal is actually decent. AIG still makes a lot of money, so the 80% stake in the company that the U.S. government now owns will almost certainly pay handsomely down the road.

Paulson's plan to use federal money to buy up all those stinkin' mortgage-backed securities that nobody wants to touch: now that's a bad deal for the American taxpayer. If Congress let's Paulson have his way on this one it'll cost the American people about $1 trillion dollars, no exaggeration. The American people would be foolish to approve such a plan.