30 years ago, the Federal Government "bailed out" Chrysler with a loan. Taxpayers eventually made some money on that loan.
Thus began the age of bailouts, with bondholders of the poorly-run bank Continental Illinois being made whole due to years of hard work by the Feds after the bank collapsed, then the bailout of Mexico's bondholders in 1995 in and end-run around Congress, the bailout of Wall Street in the 1998 LTCM collapse, etc.
Now we read this about Chrysler (WSJ):
The government said it would provide Chrysler with capital for 30 days to cut a workable arrangement with Fiat SpA, the Italian auto maker that has a tentative alliance with Chrysler.
If the two reach a definitive alliance agreement, the government would consider investing up to $6 billion more in Chrysler. If the talks fail, the company would be allowed to collapse.
Just as with Citigroup and its ilk today, one wonders if it would not have been better if Chrysler had been left to die in 1979. Think of how many investors have lost how many dollars propping this corpse up for the last three decades.
(EBR might praise the administration for making a tough decision on the automakers, except that at least these companies actually make products people use, employ skilled labor, and are victims of the worst economic banana since the Great Depression; whereas those who caused this banana are receiving trillions of dollars in aid. While in the bailout mode, why not give a little less to Big Finance and more so the automakers can ride out this downturn, Mr. President?)
It is past time for a people-centric financial policy built on equity rather than debt. Policies in that direction will in and of themselves render "banking" what it was in the 1950s, a small utility-like part of the economy without the swagger and pretense of all the "Masters of the Universe" bull----.
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