Our Ms. Brooks: Too Big To Fail
Rosa Brooks' latest column rather neatly dissects the prevailing mood of the American public when it comes to the various bailouts the government has been shoveling out to big finance and big auto makers. That mood is a combination of disgust, disbelief, and anger. The various packages will easily reach into the trillions of dollars, far more than the recently passed recovery bill designed in part for the rest of us, GOP lies about it aside, and yet those business packages, passed hastily and without proper oversight provisions because the emergency was so dire and economic collapse so imminent, have yet to show any evidence of doing what they purportedly would do.
The theory is that bailing out banks, the auto industry and other corporate giants will trickle down to the rest of us.
Too bad it doesn't seem to be working. Those bank loans that were supposed to start flowing as a result of the TARP? They didn't. The 20 biggest banks that received federal bailout funds gave out, on average, less mortgage and business loan money in the last quarter of 2008 than in previous quarters. Credit-card lending was up slightly, but those same banks also jacked up interest rates. And there's little comfort for those concerned about their retirement funds: On Tuesday, the Dow plummeted to pre-bailout levels.
Don't expect the auto industry bailout to produce better results. Detroit was in trouble before the economic crisis began because it couldn't produce reliable, efficient cars that people actually wanted to buy. Its restructuring proposals do little to change that. The bailouts seem to be so much taxpayer money going into a black hole, and the business plans the companies filed Tuesday anticipate that they'll need billions more.
A black hole, indeed, one with a sign pointing in the direction of glitzy corporate retreats and excess executive rewards for a job poorly done.
Ms. Brooks whimsically suggests an alternative that might have worked more effectively:
What if the government focused on bailing out ordinary Americans instead? Divvy up the $8.7-trillion estimated bailout price tag and Uncle Sam could send every single household a check for nearly $80,000. Who knows -- maybe ordinary Americans would have put that money to good use, buying goods, starting businesses, sending kids to college.
She quickly dismisses the idea as too naive because an American family just doesn't fall into the category of "too big to fail."
Perhaps an American family doesn't fit the description of "too big to fail," but the American family in the aggregate certainly does in terms of productivity, invention, and common sense. Oh, some of us admittedly screwed up by using our homes as ATM machines, by buying those homes we couldn't really afford in the first place, and by believing that those get-rich-quick schemes offered by such fast talkers as Bernie Makoff weren't really too good to be true. Still, I think most of us have learned our lessons.
I see no evidence that the banks, Wall Street, and the big three auto makers have learned anything other than the quickest route to Washington, DC for more money.
There's clearly something wrong with this picture.
The theory is that bailing out banks, the auto industry and other corporate giants will trickle down to the rest of us.
Too bad it doesn't seem to be working. Those bank loans that were supposed to start flowing as a result of the TARP? They didn't. The 20 biggest banks that received federal bailout funds gave out, on average, less mortgage and business loan money in the last quarter of 2008 than in previous quarters. Credit-card lending was up slightly, but those same banks also jacked up interest rates. And there's little comfort for those concerned about their retirement funds: On Tuesday, the Dow plummeted to pre-bailout levels.
Don't expect the auto industry bailout to produce better results. Detroit was in trouble before the economic crisis began because it couldn't produce reliable, efficient cars that people actually wanted to buy. Its restructuring proposals do little to change that. The bailouts seem to be so much taxpayer money going into a black hole, and the business plans the companies filed Tuesday anticipate that they'll need billions more.
A black hole, indeed, one with a sign pointing in the direction of glitzy corporate retreats and excess executive rewards for a job poorly done.
Ms. Brooks whimsically suggests an alternative that might have worked more effectively:
What if the government focused on bailing out ordinary Americans instead? Divvy up the $8.7-trillion estimated bailout price tag and Uncle Sam could send every single household a check for nearly $80,000. Who knows -- maybe ordinary Americans would have put that money to good use, buying goods, starting businesses, sending kids to college.
She quickly dismisses the idea as too naive because an American family just doesn't fall into the category of "too big to fail."
Perhaps an American family doesn't fit the description of "too big to fail," but the American family in the aggregate certainly does in terms of productivity, invention, and common sense. Oh, some of us admittedly screwed up by using our homes as ATM machines, by buying those homes we couldn't really afford in the first place, and by believing that those get-rich-quick schemes offered by such fast talkers as Bernie Makoff weren't really too good to be true. Still, I think most of us have learned our lessons.
I see no evidence that the banks, Wall Street, and the big three auto makers have learned anything other than the quickest route to Washington, DC for more money.
There's clearly something wrong with this picture.
Labels: Corporate Welfare, Economy
posted by Diane at 4:14 AM
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