So the Federal Government is running the largest insurance company in the world now by swooping in to “save” AIG with 80 billion of our tax dollars. This follows the bailout of Bear Sterns last month and numerous bailouts in between the two events.
I guess I’m wondering where it’ll stop? Our economy is dependent on companies like General Motors too. If they threaten to go under, will the Government step in and take over GM? It’s one thing to use the power of the federal reserve to bail out banks. It seems like quite another to bailout privately held companies.
I wrote about this several months ago: Profits Are Privatized While Losses are Socialized. The same appears to be holding true today unfortunately.
It’s worth asking why CEO’s and high level executives of these companies were receiving tens of millions of dollars in bonuses for leadership and decisions that would eventually lead them to failure. It seems reasonable to me that we as taxpayers shouldn’t be on the hook for these companies who choose to pour their extra capital into the pockets of their executives instead of shoring up their bottom line.
What’s to prevent any other large company in this Country from throwing it’s hands up and expecting the taxpayers to come bail them out? This business of socialized capitalism needs to end, and it needs to end now.
I live in the Washington Heights neighborhood of Milwaukee, WI with my wife Jen, our daughter Emerson, and sons Carter and Colton.
Dan,
I agree with you 100% (never thought you’d hear that did you?). Bad decisions made by these greedy (and that’s what these companies became – GREEDY) companies should not be “saved”. It is dissappointing and extremely unnecessary that people, that had little to nothing to do with these failures, will lose their jobs, but the government and more importantly the tax payers should not shoulder this much burden because of rank stupidity!
I trust the market to fix these problems, and the government needs to take a more laissez faire attitude towards these companies and let the market correct itself. The more we reward incompetence, the better chance it will repeat itself. These companies made unnecessarily high risk decisions, and in the end they need to pay for those mistakes. After the mistakes have been corrected, by the market, and not government, then new, better managed companies can come in and pick up the pieces. If our desire, as a country, is to continually prop up and support badly managed companies, we’re doomed to fail.
Sean, I’d agree with you as well on 99% except to say that an overly “laissez fair” attitude is what got us into this problem to begin with.
The “I have a piece of paper, you have a piece of paper, let’s trade it and make money!!!” attitude is what is, in my opinion, the root of this problem. The well being of our economy shouldn’t be rooted in the futures market.
This is where we’ll probably disagree, but I think we need more referees in this game to make sure that things like this don’t happen in the future. What’s in place now obviously isn’t working.
My laissez fair comment was more directed to the bail out portion vs the “referee” portion. I’m sure how we got here and how we fix it could be debated by you and I, but to bail these companies out to the tune of 85 BILLION is not something the tax payers should have to be burdeded with….