I Got Yer Bailout Right Here

So there’s been oh so much I’ve wanted to write about the
past few weeks but I’ve had, amongst other problems, option paralysis—there’s
so much for me to rant and spew over, how’s a poor boy to choose? 

But just now, pondering—like most of our great nation—the
possibility of the first worldwide depression since The Great Depression, I was
thinking about the whole “too big to let fail” situation, where joints like AIG
could drag the entire world down with them if we don’t do something, but if we
do, we run the risk of entering Moral Hazard territory, teaching the folks at
the top that it’s okay to take insane risks even with stakes this high, since
we’ll have to bail them out again and again and again, while the perps
themselves walk away with, in some cases, literally $50,000,000 to show for
their incompetence. Socialize the risk, privatize the profits, as they say. 

So what’s to be done? Well, the obvious thing—and it didn’t
even require hindsight of any sort, much less the 20/20 variety, just a lack of
brainscrewing amounts of idiocy and greed—is to have kept in place the
regulations installed during The Great Depression to make sure another Great
Depression never occurred. I mean, seriously—duh

But we’re past that and the only ones who want to dwell on the
past are the ones who aren’t guilty. So let’s look forward. What’s to be done
to keep this from happening again?

This is where my latest rant and spew comes in. You are,
undoubtedly, trembling with joyful anticipation.

After we put the Glass-Steagall act or its equivalent back in
place post-freakin’-haste, we push for follow-up legislation to take place. To
wit: the chairman of the board, the CEO and the CFO of a corporation which
requires the Fed to bail it out will have all assets taxed at the rate of 99.9%.
Not just income. Assets. They lose everything but pretty much what they need to
stay alive.

And to make sure that they don’t jump ship when they see
things heading south, it’s retroactive for, say, four years prior. You’re in
one of the major positions within four years of a company needing a bailout,
you’re on the hook. 

A Fannie Mae/Freddie Mac situation would never ever happen
again. 

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About the other scott peterson

Writer of comics and books and stuff.
This entry was posted in Banking. Bookmark the permalink.

5 Responses to I Got Yer Bailout Right Here

  1. Ed says:

    Hear! Hear! I second the motion, gov’ner!

  2. shannon says:

    i’m glad i’m not the only one who sees the lunacy that is ruling among our leaders.

  3. Mary says:

    Scott Peterson for President!!!!!!!

  4. Tabatha says:

    Wish someone had checked with you first!

  5. scott says:

    From Glenn Greenwald:

    Second, whatever else is true, the events of the last week are the most momentous events of the Bush era in terms of defining what kind of country we are and how we function — and before this week, the last eight years have been quite momentous, so that is saying a lot. Again, regardless of whether this nationalization/bailout scheme is “necessary” or makes utilitarian sense, it is a crime of the highest order — not a “crime” in the legal sense but in a more meaningful sense.
    What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism — where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse? We’ve retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded.
    More amazingly, they’re free to walk away without having to disgorge their gains; at worst, they’re just “forced” to walk away without any further stake in the gamble. How can these bailouts not at least be categorically conditioned on the disgorgement of ill-gotten gains from those who are responsible?
    The mere fact that shareholders might lose their stake going forward doesn’t resolve that concern; why should those who so fantastically profited from these schemes they couldn’t support walk away with their gains? This is “redistribution of wealth” and “government takeover of industry” on the grandest scale imaginable — the buzzphrases that have been thrown around for decades to represent all that is evil and bad in the world. That’s all this is; it’s not an “investment” by the Government in any real sense but just a magical transfer of losses away from those who are responsible for these losses to those who aren’t.
    And all of this was both foreseeable as well as foreseen — see the 2002 grave warnings from Warren Buffett on pages 14-15 of his shareholders letter (.pdf), among many other things — and it’s also happened before, when the Federal Government bailed out the S&L industry that (with John McCain’s help) was able to gamble recklessly and then force the country to protect them from their losses. The people who did this have no fear of anything — they completely lack the kind of healthy fear that impedes reckless behavior — because they know how our Government works and that they control it and thus believe that their capacity to suffer is limited in the extreme. And they’re right about that.

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