I really am. People should be very suspicious whenever the government wants to give money to businesses. Whether we’re talking about farmers, car makers, or investment bankers, it always stinks. Luckily, people in the “I hate rich people” camp are objecting to it too. It’s an odd combination, fiscal conservatives and wealth redistribution types, but hey, whatever works…
I’m still not sure what I’m supposed to see that is so good in the bailout. People made a lot of money assuming the risk of those bad loans, why are we now considering helping them now that the chickens have come home to roost? It was their call, they should bear the consequences.
I’m not dogging them for taking risks. At some point, if you want to invest, you will have to take some risks. It’s up to the organization to determine how much risk to take. Clearly, wall street as a whole took on too much risk. But not all banks did. That brings me to my next point. People say that we need to do something, otherwise the credit markets will dry up and the economy will grind to a halt. There’s a few problems with that thought, first, contrary to the panicky headlines everywhere, not all banks, not even most banks are having problems. This article from WaPo talks about how many banks are having no problems lending. As a matter of fact, they are “drowning in liquidity” because people are liquidating assets they think are risky (like stocks, more on that in a sec) and putting the money into the banks. Imagine that, there are some banks that are run properly, who would’ve thunk it?
The other problem with the “we have to prop up the credit markets” schtick is that the organizations that lend money to make money have to, well, lend money. Think about it, if the business is in the business of lending money to make a profit, they will have to do something to stay in business. In other words, they’ll figure it out. Even if there is a credit freeze, the industry will thaw itself out.
But what about the stock market? We have to do something to stabilize it!!! Yes, the stock market plunged (that’s the only good word), but I’m of the opinion that it was going to do that anyway what with the mismanagement of all of those banks. Do we really want a “stable” stock market is it requires the backing of all US taxpayers to keep it stable? Really? There was a lot of selling selling yesterday, but remember this, for every sale there must be a buyer. People are willingly buying up stocks. Admittedly, at the right price, but still, people still think there is value in them. There was a predictable bounce today (at least early on when I wrote this), a good trader made a killing yesterday and today… Anyway, unlike the bailout, all of those transactions are voluntary. Investors can examine the risks and invest in what they want.
If there’s one thing that Wall Street does well, it’s salvage jobs. If there is something that is worth money offered at the right price, someone will buy it. We should allow that to happen. Let the companies that screwed up go under and let the people that didn’t screw up (JP Morgan, I’m looking at you) prosper. Yes, there is going to be some turbulence and some pain, but we don’t need to add to it or prolong it by sinking taxpayer’s money into it too…
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One reply on “I’m glad it didn’t pass”
I agree completely. For all of the banking crisis throwing the American economy into turmoil, I hear other stories as well. Bank of America taking over Merrill Lynch; CitiGroup buying Wachovia. If there is a bank in trouble with assets to sell, someone will buy them. If the decks get cleared of the shaky institutions and only the solid ones survive, things could be worse.