Detroit vs. Wall Street

[BzaDem]

The automakers are not too big to fail, but certain financial firms are too big to fail.

There. I said it. While many here may act outraged at such an idea, make no mistake -- this is the working assumption that the entire Obama administration is making right now.

What does that even mean? It does NOT mean that the Obama administration wants this to be the case. It does NOT mean that Obama WANTS to reward incompetent and borderline criminal bankers who brought the world economy to the brink, while punishing companies like GM who suffered side effects from this. Anyone who knows anything about Obama's political views prior to his election would know that Obama doesn't WANT the auto industry to fail while helping out big finance.

It simply means that as a matter of objective reality, letting certain financial firms fail would plunge the world into a depression, just like letting the banking system fail in the 1930s did. Such a depression would hurt the American poor and middle class the most, since we don't have nearly as large a social safety net as countries in Europe do. And, as another matter of objective reality, allowing one or two of the big 3 to fail will not cause such a depression.

The idea that Detroit can be let to fail while certain financial firms can't is not a very controversial statement from an economists' point of view. Virtually no economist thinks that allowing the American auto industry to fail would cause a depression (though the resulting job loss would certainly make our deep recession worse). And very few economists thinks that we could escape a depression if we let AIG, Citi, and Bank of America (for example) to simultaneously fail.

What does this mean for Obama, who is trying to resolve this crisis? For one, it makes negotiating with the financial industry much harder than negotiating with the automakers. Obama obviously wants to curb executive compensation (salaries and bonuses) at financial firms that we are bailing out. But it is not that easy. Obama could threaten to pull the plug on the bailout funds unless the banks reduce compensation, but the bankers would laugh in the governments face, because the banks know that Obama knows that he can't let the financial industry collapse. In a legal world where there are just two options -- full payment to all parties involved or bankruptcy, the banks know that bankruptcy would never be entertained by Obama. So they have little reason to make any concessions.

On the other hand, it is much easier for the government to negotiate with the automakers, because there is an incentive for both parties to be reasonable (as opposed to just one party in the case of financial firms). GM (its executives, unions, and bondholders) knows that if they are unreasonable, Obama will let GM fall into bankruptcy, and all stakeholders will be in a much worse off situation.

This is precisely why the UAW will probably be forced to make changes to its contracts, while the AIG traders won't have to give up a penny of their bonuses. It has NOTHING to do with Obama favoring bankers over auto workers -- it simply has to do with the law as it is currently written, and the economic interconnectness of large financial institutions.

The solution in the future is to prevent financial companies from getting too large to fail (or, failing that, regulating too-big-to-fail companies so that they won't ever be in a position to be bailed out by the taxpayer). But that is for the future. In the present, the current laws and financial interconnectedness are real problems that can't just be wished away by Obama, and Obama realizes this.

So is there a double standard between Detroit and Wall Street? Yes, without a shadow of a doubt. But it is not because Obama favors bankers over automakers, it is not because Obama is a "corporatist," and it is not because the Democratic party is in the pocket of big finance. People on this board can keep pretending this, but those people are contributing to a wave of populist outrage based upon false pretenses that could take down elected democrats, preventing them from enacting the real progressive agenda that most here want enacted.

[w4rma]

1. Those large financial institutions are *not* too big too fail. In fact it would probably be better

for everyone if they did and allowed other, cleaner, businesses to buy up the contracts.

[Barack_America]

5. They currently are.

I don't give a shit if they fail, but the consequence of those failures must be mitigated first because I DO care if I stop getting paychecks, my credit card companies close out my accounts, etc.

[TBF]

16. There is no reason why the government can't guarantee the accounts

at banks and nationalize them. What you really are fighting for are the investment accounts and credit cards. As far as I'm concerned the investment banks are no better than casinos, and we can let them wither away.

It comes down to which side you're on. Are you with the owners or with the workers?

[BzaDem]

17. "It comes down to which side you're on. Are you with the owners or with the workers?"

That is the kind of well-intentioned but misguided populism that has the potential of preventing Obama's progressive adgenda from getting through.

I'm not sure what you mean by investment banks, since the 4 big investment banks have either failed (Lehman), were bought by a real bank (Meryl Lynch), or converted to bank holding companies (Goldman and Morgan).

But if you are talking about AIG, you are wrong. Whether or not a company is any better than a casino has NOTHING to do with whether or not we can let it fail without causing a depression. AIG's financial products group was probably much worse than most casinos, but it is so interconnected that no reasonable economist (and very few unreasonable economists) would agree that it can be allowed to fail.

[TBF]

19. We're already in a recession/depression, and what you are suggesting

is going to put millions of people on the street while the billionaires continue to profit. If Obama's "progressive agenda" means we are going to save billionaires while we allow poor children to die on the street, then you are correct I don't care if that gets passed.

[BzaDem]

21. We do not have 25% unemployment.

We would have 25% unemployment if we allowed AIG, Bank of America, and Citibank to fail (or otherwise default on their debts). And we would have that kind of unemployment for years. This is why reputable economists don't take that idea seriously.

[TBF]

23. I didn't say BOA and Citi should fail - I quite clearly said they should be nationalized. n/t

[BzaDem]

28. Even if temporary nationalization was a viable option

(and it very well might be), it is going to take a lot of time for the government to get ready to run large financial companies. They will probably have to hire management from the private sector (probably the same people who got us in this mess). And we will still have to pay the debt to the bondholders, which is still a bailout of gigantic proportions. So it is really not tremendously different.

In the meantime, until we are ready to nationalize, we will still need to honor all contracts (including onces to executives who shouldn't be getting anything), since they have no incentive to agree to any contract modification (as they know the financial companies will never be allowed to go bankrupt).

[TBF]

32. I did not use the word "temporary" . n/t

[BzaDem]

42. Well I don't think any economist actually thinks permanent nationalization makes any sense. n/t

[TBF]

48. You've never heard of Paul Krugman? I know the bots have thrown him under the bus,

but here's the op anyway: http://www.nytimes.com/2009/02/23/opinion/23krugman.html?_r=1

[BzaDem]

50. You know, you should read the articles you cite to make sure they don't cut against your whole point

From the article you youself cited:

"And once again, long-term government ownership isn’t the goal: like the small banks seized by the F.D.I.C. every week, major banks would be returned to private control as soon as possible. The finance blog Calculated Risk suggests that instead of calling the process nationalization, we should call it “preprivatization.”"

[TBF]

60. I read it and he supports temporary nationalization, which is more than you will accept

as you continue to defend the billionaires.

[BzaDem]

63. Here is what I said about temporary nationalization upthread

"Even if temporary nationalization is a viable option (and it very well might be), it is going to take a lot of time for the government to get ready to run large financial companies. They will probably have to hire management from the private sector (probably the same people who got us in this mess). And we will still have to pay the debt to the bondholders, which is still a bailout of gigantic proportions. So it is really not tremendously different."

I never said that no economist supported temporary nationalization, and I never even said that I didn't support temporary nationalization. I simply said no reputable economist supports permanent nationalization, and that temporary nationalization would take a long time to execute and wouldn't really change much.

[Raineyb]

35. They should also be broken up.

Too big to fail is too big to exist. No company or groups of companies should have the country over a barrel this way. None!

Regards

[Raineyb]

33. Actually, you might be wrong about that.

Our Unemployment numbers are rather skewed and deliberately so. There are lots of people who are technically unemployed but don't show up in the stats.

Regards

[BzaDem]

7. As much as that idea sounds appealing on the surface,

most economists look at the details of what would ensure if we allowed them to fail, and believe that we can't allow it to happen.

[harun]

66. If any of them get "too big to fail" they should be broken up

Never should have been allowed to be in that position.

[atreides1]

2. What "most" of us want

Is to know when exactly are they going to start working on this so-called "real progressive agenda", and get it passed?

Or are we going to keep hearing about it and in the end get such a watered down, loop holed filled version, that makes using an anchor as a flotation device logical?

By the way try selling your concept to those people who will be unemployed soon and maybe you can explain to them and us why we taxpayers are providing bonuses to fuck ups who lost billions, and pissing on working people who did everything right!!!

[Thrill]

4. Obama's budget is "real progressive agenda"

[Raineyb]

36. Really? You think it will after the Blue dogs finish with it?

Don't hold your breath.

Regards

[BzaDem]

6. "Maybe you can explain to them and us why we taxpayers are providing bonuses"

I believe I just did.

But if you didn't want to read the OP, in summary: allowing certain big financial institutions to fail would cause unemployment to hover around 20-25% for a decade, which is exactly what happened when the government allowed banks to fail in the depression.

Not sure how else to put it.

[Raineyb]

38. No you didn't.

Your OP explains why Wall Street is getting a bail out while Detroit is being told to go to hell but it doesn't explain the bonuses that they're getting with taxpayer dollars.

Frankly, there's no bloody excuse for the bonuses.

Regards

[BzaDem]

45. They are getting the bonuses because they were contractually obligated to give them

before the bailout. The only way to modify the contract is with both parties consent -- and the people receiving the bonuses who haven't already agreed to return them have no incentive to agree to a change to the contract. Why? Becaues they know we can't let AIG fail, and if we don't let them fail, all of their contracts would be upheld in court.

Obama's proposal for resolution authority for companies like AIG (which would allow us to change contracts) is a solution to this, but it would not affect AIG in the present.

[Raineyb]

53. Contracts can be broken.

And when a company is on the dole they ought to have an obligation to save money where they can which includes not paying bonuses.

They people who returned the money did not do so because they care so much about AIG not failing. If the people running the company gave a damn they wouldn't have gambled the way they did in the first place. Their short term money came before the long term health of the company and they figured that they're so big they'd have to be bailed out. (surprise surprise) They gave the money back because they found they would end up paying it all in taxes.

These are selfish people with a huge sense of entitlement. I have no idea why you're bending over backwards to defend them.

The money would be better spent on people at the bottom of the income ladder but apparently all of those folks can go to hell so long as we bail out AIG and the rest of the rapacious Wall Street crooks.

[BzaDem]

54. Again, show me the law that states that the Government can break valid contracts.

And considering the bonus-taxing bill is now essentially dead in the Senate, that is a pretty poor reason for returning the money.

[Raineyb]

56. Once the government owns the damn company the party of the first part in essence doesn't much exist

anymore does it? The company is broke, the government made no such contract and should have made sure that the tax money was not used to fulfill it. The AIG executives have no obligation to taxpayer dollars.

Spare me the bullshit about the sanctity of contracts. It's obvious that it's not true at all when you consider the sanctity of blue collar contracts.

[BzaDem]

61. The two parties are AIG (now the government) and the employees who were promised bonuses.

Just because we buy a company does not mean all previous contracts made by the original owners are now invalid. The employees who were promised bonuses simply do not agree to any change of contract. Done. They get their bonuses (in court if we refuse to give them the bonuses in advance).

You can say "spare me the bullshit about the sanctity of contracts" all you want, but that doesn't change the fact that a court can and will order the contracts be fulfilled.

[firedupdem]

3. rec'd. n/t

[Adelante]

8. Well said

:thumbsup:

[whosinpower]

9. That is not for the future

The solution in the future is to prevent financial companies from getting too large.

That is not the solution to the future - that is the solution for right here and now. Break em up. Sell them in pieces if need be. Form a US government national bank that is government run as a bypass to the lock up that the private financial institutions created.

If the taxpayers are on the hook, so to speak, because of incompetance, gross mismanagement, fraud, and ponzi schemes within the finance industry - then the finance industry MUST be reformed - not in the future - but right now.

Allowing them rope,guarentees on debt obligations, and trillions of money - because it is too scary take them on directly, does absolutely nothing formulate a confidence restoring measure. Right now, the way I see it, is that government has publicly and privately given the finance industry their sacred position of trust - if you don't trust the banks - at least know that the US government has their back and will not allow them to fail. This is not only dangerous, it puts the US government is a treacherous position. The banks have given nothing, absolutely nothing to deserve this most generous gift.

Even when the US gives them 700 billion in TARP funds, instead of loaning it, and maintaining their traditional business model, they rolled it right back into treasury bonds, all the while waiting for the credit deritive default's to pay off - which they did, thanks to the bailout of AIG. Nope. I do not buy - Obama wants to change things but can't because if he does, then the world will plunge into a deep depression.

Obama is the president of the United States, and it is the government of the United States that writes the rules, and regulations. It is the government that has guarenteed the banks debt obligations - he can, and should demand far far more from the financial industry - and if they do not accept his demands - then Obama should sidestep them altogether and create a parallel bank to do the things that these yahoo's will not. The oligarchy MUST be broken.

[BzaDem]

11. It is very easy to sit in an armchair and dictate what must happen to save the financial system.

But it is not so easy to do it in practice.

There are few, if any economists that would agree with you that the solution to this mess is to permanently nationalize the financial system. Even the most liberal economists think this is a crazy idea, so I am not going to waste time debating it.

There is a much stronger case for temporary nationalizing banks. But the problem still remains that we currently don't have the capability to run large banks, value assets, and break them up. We would need to hire management out of the private sector, so really the same people who got us into this mess would still be managing the system, and it wouldn't be much change from the way it is now. Even if we were eventually going to do this, it would take a long time to get ready for it, and it would all have to be done at once.

The whole point of the 700 billion in TARP funds was to increase these banks' regulatory capital, so they wouldn't all simultaneously go bankrupt. It was NOT to increase their lending. Buying treasury bonds is the safest way to invest their capital. The only real way to get banks to lend again is to clean up their balance sheets (whether this comes from temporary nationalization and paying the bondholders directly, overpaying for the assets, or paying a hedge fund to overpay for the assets).

Saying things like "the oligarchy MUST be broken" might make you feel a bit better inside, but doens't say much in terms of an actual practical solution to the problem that would not plunge the world into a depression.

[whosinpower]

30. Well

Increasing banks regulatory capital - isn't that so they can safely loan more money out???????
They over-leveraged themselves, true or false?
They lobbied heavily for deregulation which would allow them to over-leverage themselves - true or false?
They used AIG insurance as a safety net for credit default obligations - and because AIG was so central and critical to profit generating schemes that rebundled mortgages, sold them abroad, and insured and reinsured those packages every single time they were resold - guys like you determine that AIG is simply too crucial to fail - because if it fails - then confidence and trust in the entire system is utterly broken, and it would plunge the world into a depression.

Here is the truth - THE SYSTEM can only function on a basis of trust and confidence. If it is only the government of the US word that gives that system trust and confidence - then government must step in - because private interests have failed. Private interests cannot restore confidence and trust--they have proven themselves lacking. No amount of cajoling, whining, and funding can change that. If government throws too much money into the hole, then the dollar plunges. And, the taxpayer is on the hook, one way or another - taxes will have to go up.

I know you guys are terrified of nationalizing the banks - but, as a wise man once said to me - Americans always do the right thing........
after they have exhausted every other alternative,
they finally come around.

I don't begrudge Obama for putting his foot down in regards to GM.
BUT - AIG - is another matter altogether. It should be wound down, broken up, and a controlled bankruptcy. If the banks are insolvent - then they too should be broken up. What government can do, is step in and provide services that are critical to the mainstreet economy - services that the banks apparently are reluctant to do--I guess because traditional loans take too long to be profitable and are boring.......

[BzaDem]

46. No, increasing regulatory capital was so they don't all go bankrupt.

It had little to do with allowing them to loan more money out. It was really so they didn't stop loans altogether (which would render unemployed anyone who worked for a company that relied on short term loans to finance payroll, among a large number of other effects).

You keep saying AIG should go under a controlled bankruptcy. We currently have NO authority to manage a controlled bankruptcy, or break them up, or do anything other than bail them out or let them go through a disorderly bankruptcy. That was the whole point of Obama's proposal to Congress -- but it wouldn't affect the current situation with AIG. You can keep calling for a controlled bankruptcy until you go hoarse, but that doesn't change the fact that we are a nation of laws and no law currently allows the US government to manage a controlled bankruptcy of a non-bank institution.

The government is going to continue to throw money in the hole even if we nationalize the banks like you said. The government is not going to default on loans from bondholders. If we continue to pay them after we nationalize, it is still continuing to pay them. No amount of cajoling or whining will change that. The government will throw as much money as necessary into the hole, the dollar will probably weaken, and the taxpayer will be on the hook (and one way or another, taxes will probably go up). This will happen regardless of whether we nationalize the banks or bail them out as they are.

[whosinpower]

65. Because they were overleveraged.

"It had little to do with allowing them to loan more money out. It was really so they didn't stop loans altogether (which would render unemployed anyone who worked for a company that relied on short term loans to finance payroll, among a large number of other effects)."

They were overleveraged - by their own doing, by their own wishes to deregulate.

No CURRENT law allows the US government to take over a failed non bank institution. That is not to say that laws cannot be changed and updated. They change all the time. And ESPECIALLY, and SPECIFICALLY, when an institution's failure can and does lead to a crisis of worldwide proportions - it seems to me, not only prudent, wise to do so - but necessary and mandatory. It is necessary and mandatory when the confidence and trust of a nation is in question. The longer Obama waffles and throws money into the pit, the more erosion occurs.

It is foolish - utterly foolish to throw money at person A, in hopes that person B also throws money at person A, so person A can then loan money to person C. It is foolish because person A has not been proven to be prudent, but instead, has arrogently taken the position that they are irreplacable. A better way, would be for government A loan the money directly to person C, which allows credit to function without the person A who screwed up in the first place. That way, main street does not suffer the catastrophic effects of credit withheld.

With unemployment rising, finding good people to do this is not nearly as difficult as you might think. No one is irreplacable - not even the president. And, most specifically, the threat of depression is all the more reason to not allow any single institution to hold such power over any government, or nation.

[spoony]

44. And it's easy to sit in that armchair and decide a region is disposable

[Odin2005]

10. This is pretty much what I've been thinking all along.

Obama is stabilizing the patient, and yes, that is going to mean situations like the bank bailout that are objectively necessary even if it violates our sense of fairness and "karma". Triage sucks, that doesn't mean we shouldn't be doing it.

[Hepburn]

12. I just do NOT understand this!

The assholes who looted our financial institutions get to stay and get a ton of $$$$. But...the head of one of the auto makers has to go because the govt wants it this way? And...another one of the US auto makers MUST merge with a foreign auto maker?

WTF???? :wtf: :shrug:

[BzaDem]

13. Yes, that is all correct.

In a normal situation (where failure would not cause a depression), the government would let businesses fail (or at the very least condition aid based upon the companies having a plan that returns them to viability).

But in this abnormal situation, where failure would cause a depression, "the assholes who looted our financial institutions get to stay and get a ton of $$$$" because the alternative would be allowing them to fail and unleashing unimaginable suffering on the poor and middle class for years.

You are basically saying "This isn't fair! This isn't fair!"

But the people in the Obama administration are beyond that. They know it isn't fair and that there is no way to make it fair (that wouldn't result in a depression). Their objective at this point is to get us out of the crisis.

[Hepburn]

14. I simply do NOT agree ~~ if they remove the heads in one major industry...

...then the same should apply for the head of another.

Why is a banker more important than the CEO of an automaker. Is the banker less at fault?

I think not.

If we own, for example, AIG, then we as the owners have a right to replace the head of AIG with someone who is better suited to run OUR company.

[BzaDem]

15. We DID replace the head of AIG.

We replaced the head of AIG with someone who is currently working for $1/year.

As for banks, which we do not own (but are bailing out), we cannot force them to replace their CEO if they do not agree. We could pretend that we would halt all bailout money if they don't, but what if they still refuse and call our bluff? We can't actually withhold bailout money and let them fail, since that would cause a depression.

That is the problem.

[Hepburn]

24. "We"????

You and who else? :shrug:

[BzaDem]

26. The government, elected by the people, of which I am a part of.

[girl gone mad]

27. AIG's CURRENT CEO just handed out..

almost $200 million in bonuses after losing $60 billion in one quarter.

Is he even worth $1?

[BzaDem]

29. Yes, because they were promised by contract that he didn't write.

If he didn't hand out the bonuses promised by congract, AIG would have been sued, and AIG would have been forced to not only give the full bonuses to the traders, but they would have had to pay double damages for not doing it before the lawsuit.

This was all covered extensively in the news.

[whosinpower]

34. What of union workers contracts then?

In regards to pensions of GM workers - that the government realizes, if an orderly bankruptcy is allowed - then those contracts are null and void????

Why is AIG more important than the pensions of GM auto workers???

All the more reason for AIG to go bankrupt - those contracts would of been reworked under through bankruptcy. There would of been no lawsuits.

[BzaDem]

49. Did you read my OP?

If AIG goes into bankruptcy, we will enter a depression, according to most liberal and conservative economists.

If GM goes into bankruptcy, we will not enter a depression (at least because of that), according to most liberal and conservative economists.

That is why GM contracts will be changed, and AIG contracts won't necessarily be. It has nothing to do with "liking" one company over another, it is just acknowledging the current state of the law and interconnectedness of AIG.

[Raineyb]

40. Contracts can be broken

What we have here is an unwillingness to break the contracts of the bankers while the contracts of blue collar autoworkers don't mean shit. Because that is exactly the message being put out when we have the rhetoric we have about bankers vs autoworkers.

It has become painfully obvious that trickle down does not work. So why are we doing more trickle down bullshit?

Regards

[BzaDem]

47. That is a lie.

Contracts cannot be broken unless both parties agree or by a bankruptcy court. If you say otherwise, please point me to the specific statute and subsection that gives the U.S. government authority to abrogate private contracts when a party is not in bankruptcy. Put up or shut up please; I am sick of arguing with people who don't have their facts straight.

In the case of the automakers, both parties will agree because if they don't, they will go into bankruptcy and both parties will lose. But in the case of AIG, the traders know that we would never let them go into bankruptcy, so they have no incentive to agree to a contract modification.

[Romulox]

51. You aren't an attorney, and don't even know the basics of contract law.

"Contracts cannot be broken unless both parties agree or by a bankruptcy court."

Contracts may be attacked on any number of grounds: fraud, impossibility, mistake (mutual or unilateral,) and ambiguity are just a few bases of attacking a contract. In additional, the AIG bonuses were likely "fraudulent conveyances" under the Uniform Fraudulent Transfers Act.

[BzaDem]

52. Attacking contracts in court is very different than saying we can simply change contracts

and that the only reason we are not is because of our lack of "willingness."

These contracts were made well before the solvency of AIG was in doubt. The bonus contracts were posted online, and a bunch of lawyers commented that it would be very hard to overturn the contracts in court. I was simply assuming that the lawyers who analyzed the contracts were correct, since the poster's argument about our "unwillingness" to "change" the contracts didn't seem to rely on the contracts being invalid or illegal.

[Raineyb]

55. When we make no effort to do so what do you call it?

I call it unwillingness. Because I damn sure heard politicians declare that the union workers had to make concessions (which is in essences an attempt to get them to not take what is contractually obligated to them aka breaking the contract) and make no bloody statements to that effect about the bankers.

They only raised bloody hell when the public demanded to know why our tax dollars was going toward bonuses. I suspect they assumed that no one would get wind and business would go on as usual.

Regards

[BzaDem]

58. Ugh

This must be the 4th or 5th time I have said this.

It takes BOTH parties to agree to break a contract. The unions have an incentive to agree because otherwise, the automakers go bankrupt and the contracts can be voided. They could completely ignore the politicians, but that wouldn't help them in the end.

On the other hand, the bankers CAN completely ignore the politicans and not agree to any contract changes, because they know we can never let AIG go bankrupt. That is why it is so much harder to deal these too-big-to-fail entities.

Would you be satisfied if we made an effort and the bankers simply said no, and we had no way of convincing them to change the contracts?

I'm not saying this is fair; I'm simply point out the current state of affairs.

[Raineyb]

67. You can say it 5 million times. It doesn't make it right.

And as union contracts have been broken in court by companies who claimed that they couldn't afford to hold up their end of the contract a contract can certainly be broken by one side.

If AIG can't afford to keep up their end of the contract the contract can be broken. And the executives would lose in court (if the judges were at all consistent) We lack the will to make the bankers tow the line as evidenced by the unwillingness to even try.

We fucking own AIG why are we acting like we're scared of them? If they don't like it let them try to find another company to screw up. With their track record I'm sure they'll have headhunters pounding at their door. (Not!)

You're pointing out the lack of will. I just don't know why you refuse to call it what it is.

[Romulox]

59. "Acquiessence". nt

[Romulox]

57. Again, wrong. The PROPONENT of the contract must seek to litigate

to enforce it.

Someone who doesn't wish to pay out on a contract need do nothing. :hi:

"The bonus contracts were posted online"

No the were not. They were, (and remain) "secret". Unless you can provide a link. :hi:

[BzaDem]

62. Here is the link you requested.

http://dealbook.blogs.nytimes.com/2009/03/18/the-aig-bonus-contract/

And of course the government doesn't need to litigate unless they are sued. I was just assuming they would be sued, since it would probably be a pretty easy suit to win.

[Romulox]

64. I hadn't seen the contract before, but it only strengthens my analysis...

"since it would probably be a pretty easy suit to win."

Again, you have no basis for making this assertion. In particular, any "bonus" guaranteed by a company while it is insolvent, that is guaranteed to be paid regardless of how poorly the company has done for the previous year is likely a "fraudulent conveyance" under state fraudulent conveyance law. It is also a likely breach of fiduciary duty as to AIG's shareholders.

[TBF]

18. If this is the assumption: The automakers are not too big to fail,

but certain financial firms are too big to fail, you are working for the wrong side, in my view.

Do you think it's going to be pretty when some of our largest employers are forced to liquidate? Do you realize what that is going to look like? It's not just the big 3, it's also their suppliers. By conservative counts it's about 2.5-3 million people out of work at once. Would foreign auto-makers pick up some of those people eventually, probably so, but that is still a hell of a lot of people out of work - and thrown into poverty (these aren't billionaire bankers with trust funds) at one time. That is going to be people in the street, being evicted, being foreclosed on, flooding the soup kitchens, children dying in the streets. You really want that to happen? You really are more concerned about keeping your little credit cards pristine in your wallet?

You can keep pretending you care about "the little people" but it's quite obvious which side you're on.

[BzaDem]

20. It has nothing to do with what side I am on.

I am well aware of the arguments for saving the automakers, and I agree that under certain conditions they should be saved. But even assuming all of your worst case projections (if suppliers fail, forcing Ford to fail, causing alltold an additional 3 million unemployed), that would not cause a depression, while letting AIG fail certainly would. This does not mean I like AIG and don't like the automakers -- I am simply willing to look beyond my personal views to understand reality.

The main point of what I was saying was not that the automakers should actually fail. I was simply saying that because that is an actual option (unlike with AIG or Bank of America or Citibank), the automakers will be forced to make certain concessions that the financial companies won't be forced to make. I am again not saying I like this state of affairs, I am just explaining what will eventually happen.

I could have taken the easy way out and pleased people like you by going "rah rah rah torches and pitchforks" for the financial companies, but that would feed the snowball building up of misguided populism that has the potential to prevent real progressive policy from being enacted.

[TBF]

22. Those are not "worst case projections" - they are the conservative

projections of what would happen. It has everything to do with which side you're on, and you are very confused about what the word "progressive" means. Or at least what it used to mean. Democrats used to be on the side of the working folks. Yet you write an OP supporting the billionaire bankers. It could be that we are both correct in a way. If so this party is in fact splitting. To be clear I am not talking about you personally, I am speaking of anyone who agrees with the policies you are espousing. In any case, I am in solidarity with the workers. At some point each of you will figure out which side you are on.

[BzaDem]

25. I still do not follow your position.

My whole point is that in this instance bailing out the financial industry helps workers (not bankers -- workers). If we let the banks fail like we did in the depression, we will have unemployment at the levels of the depression (we would go from around 8% to 25%). Maybe the percentages are slightly off, but the general idea isn't, according to the vast majority of liberal and conservative economists alike.

So if you don't agree with me, what part of what I just said is wrong? Do you simply disagree with most economists that it really "won't be that bad" if we let the financial companies fail? Or do you agree that it will be that bad, but we should do it anyway?

If it is the first, then I disagree with your definition of "progressive," since your definition seems to be the definition of "cognitive dissonance" ("the economists feel that helping bankers will help workers in the end -- that must be wrong, because I always felt that something that helps bankers must hurt workers by definition!")

If it is the second, then I also disagree with your definition of "progressive," since in that case your definition seems to imply that it is better to be fundamentally fair and let the banks fail than it is to prevent 25% unemployment and millions of children dying in the street.

[TBF]

31. Twice I have said Citi and BOA should be nationalized, which does

not mean dissolved, and still you deliberately misunderstand what that means. I believe we're going to have to disagree on this one. I am in solidarity with workers, and that used to be a democratic position. Not so sure it is anymore after reading your op.

[HiFructosePronSyrup]

37. That's a false dichotomy.

The CEOs that run the auto industry are the same group of crooks that run wall street.

The banks have a plan to recovery, the auto industry fucked around.

No crocidile tears.

[whosinpower]

39. The banks have a plan for recovery?????

HAHAHAHAHAHA -

Here is the banks plan for recovery.......go to Uncle Sam - and make sure that Uncle Sam pays for contracts and obligations that the banks wrote - even knowing full well that they were false.

BECAUSE CONTRACTS IN FINANCE ARE WORTH GOLD,
AND CONTRACTS WRITTEN FOR WORKERS PENSIONS ARE WORTH DIRT.

I agree with you that the Auto industry screwed up.
However, the finance industry did an EPIC ROYAL SCREW THAT KEEPS ON GIVING/TAKING. That is not a plan for recovery - that is a plan to rob treasury of its last pennies, and foist the bill onto taxpayers.

[spoony]

41. You should go back to snarking

It's clear that actual analysis is quite beyond you. There's literally nothing true in what you just wrote. Nothing.

[HiFructosePronSyrup]

43. Stop crying over spilled milk.

You know it's true, and denying it won't fix anything.