bailouts don't work if you do them randomly

[unblock]

history will show that one of the biggest government mistakes in the mismanagement of this economic downturn was letting lehman brothers fail. this led directly to aig's failure and to the seizing up of the entire cds market.

more fundamentally, it pushed already wary banks to completely lose trust in each other. not so much because if lehman could fail, who would be next; but because if the government wasn't going to bail out lehman, they couldn't count on the government to bail out anyone.

you see, the purpose in bailout out bear stearns and others was not so much to protect their specific creditors, but to assure ALL creditors that the government would backstop major companies and prevent the disaster from spreading. in failing to bail out lehman, they completely undermined their own strategy.

i'm not saying the lehman deserved a bailout -- desert is not even a factor in these decisions.


NOW, they have passed on bailing out one of america's most venerable and major industries, and gm and chrysler stand at the brink of disaster. aside from the obvious, immediate impact on employees and communities, many more creditors will be damaged and again, ALL creditors will be more concerned than ever.

if the government won't bail out the automobile industry, who will or won't they bail out next? once again, they've completely undermined the entire strategy involved in doling out trillions of dollars.


so now we're out all that money and banks have more reason than ever not to trust each other and not to trust even major customers.


the trillions of dollars could have been spent far more wisely. instead it has simply been pissed away. and we will be paying interest on it for years.

good thing the government can borrow at zero percent these days.

ugh.

[liberal N proud]

1. The bu$h regime and republicans don't care about success of the bailouts

They only care about getting as much cash from the people into the hands of their already filthy rich cronies.