Wal-Mart handed out buncha fat bonuses recently for jobs well done. A fine reminder to us today of how our captitalist system of risks and rewards used to work....
Obama administration is continuing the Bush administration's half-assed policies of dithering while spending money protecting the auto industry from bankruptcy, with the resulting delay making it worse, keeping investors in turmoil and uncertainty, and costing taxpayers $$Millions$$ more.
GM is basically a vast and expensive retirement home with a money losing car-manufacturing subisdiary, and it, like Chrysler, have been asked for a new re-structuring plan. Think it will be any huge improvement on the last 22.5 plans they've done?
Goverment take over with structured bankruptcy of banks with careful selling of assets and winding out of obligations is something we have know how to do, having done it in the S + L Crisis. Obama admin sez they are afraid of "nationalization", meanwile, the FDIC takes over small banks every week? And Admin sez they can't "nationalize" a huge industry like banking--where in fact it's just a dozen big ones that are the main problem.
Goverment needs to step in and take care of this problem they helped create, or made much worse, as they did in the past. But now it's just a bunch of delays with fancy new fixes these smart guys think they've figured out. Don't they ever learn those "improvements" hardly ever work?
Let alone the idea of politicians and bureaucrats, who never have run a business and produced a profit, thinking they can do better?
Either give the money with no strings, or no money and move to bankruptcy. This hybrid goverment nationalization is the worst option. It means partisan politics get injected into this mess a big way, political connections and DC lobbying becomes paramount, and some big businesses learning "why avoid big risks when goverment can bail us out; we need to spend more on politicians".
and many of these CEOs are playing the game and laughing all the way.
Adam Posen, of the Peterson Institute for International Economics, is an expert on Japan's financial crisis and "lost decade" of economic growth. He finds many eerie similarities to US today which are troubling:
What the Obama team is proposing is disconcertingly similar to the actions of Japanese Prime Ministers Hashimoti, Obuchi, and Mori in 1995 and 1998: Rather than ask the legislature for straightforward recapitalization money, you have the political leadership preferring to risk overpaying current owners of toxic assets rather than forcing sales. For all of Japan?s supposed intervention in markets, its government still lacked the stomach for taking over banks, let alone closing them.
The guarantees that the US government has already extended to the banks in the last year, and the insufficient (though large) capital injections without government control or adequate conditionality also already given under TARP, closely mimic those given by the Japanese government in the mid-1990s to keep their major banks open without having to recognize specific failures and losses. The result then, and the emerging result now, is that the banks? top management simply burns through that cash, socializing the losses for the taxpayer, grabbing any rare gains for management payouts or shareholder dividends, and ending up still undercapitalized. Pretending that distressed assets are worth more than they actually are today for regulatory purposes persuades no one besides the regulators, and just gives the banks more taxpayer money to spend down, and more time to impose a credit crunch.
These kind of half-measures to keep banks open rather than disciplined are precisely what the Japanese Ministry of Finance engaged in from their bubble?s burst in 1992 through to 1998...
Obama administration is continuing the Bush administration's half-assed policies of dithering while spending money protecting the auto industry from bankruptcy, with the resulting delay making it worse, keeping investors in turmoil and uncertainty, and costing taxpayers $$Millions$$ more.
GM is basically a vast and expensive retirement home with a money losing car-manufacturing subisdiary, and it, like Chrysler, have been asked for a new re-structuring plan. Think it will be any huge improvement on the last 22.5 plans they've done?
Goverment take over with structured bankruptcy of banks with careful selling of assets and winding out of obligations is something we have know how to do, having done it in the S + L Crisis. Obama admin sez they are afraid of "nationalization", meanwile, the FDIC takes over small banks every week? And Admin sez they can't "nationalize" a huge industry like banking--where in fact it's just a dozen big ones that are the main problem.
Goverment needs to step in and take care of this problem they helped create, or made much worse, as they did in the past. But now it's just a bunch of delays with fancy new fixes these smart guys think they've figured out. Don't they ever learn those "improvements" hardly ever work?
Let alone the idea of politicians and bureaucrats, who never have run a business and produced a profit, thinking they can do better?
Either give the money with no strings, or no money and move to bankruptcy. This hybrid goverment nationalization is the worst option. It means partisan politics get injected into this mess a big way, political connections and DC lobbying becomes paramount, and some big businesses learning "why avoid big risks when goverment can bail us out; we need to spend more on politicians".
and many of these CEOs are playing the game and laughing all the way.
Adam Posen, of the Peterson Institute for International Economics, is an expert on Japan's financial crisis and "lost decade" of economic growth. He finds many eerie similarities to US today which are troubling:
What the Obama team is proposing is disconcertingly similar to the actions of Japanese Prime Ministers Hashimoti, Obuchi, and Mori in 1995 and 1998: Rather than ask the legislature for straightforward recapitalization money, you have the political leadership preferring to risk overpaying current owners of toxic assets rather than forcing sales. For all of Japan?s supposed intervention in markets, its government still lacked the stomach for taking over banks, let alone closing them.
The guarantees that the US government has already extended to the banks in the last year, and the insufficient (though large) capital injections without government control or adequate conditionality also already given under TARP, closely mimic those given by the Japanese government in the mid-1990s to keep their major banks open without having to recognize specific failures and losses. The result then, and the emerging result now, is that the banks? top management simply burns through that cash, socializing the losses for the taxpayer, grabbing any rare gains for management payouts or shareholder dividends, and ending up still undercapitalized. Pretending that distressed assets are worth more than they actually are today for regulatory purposes persuades no one besides the regulators, and just gives the banks more taxpayer money to spend down, and more time to impose a credit crunch.
These kind of half-measures to keep banks open rather than disciplined are precisely what the Japanese Ministry of Finance engaged in from their bubble?s burst in 1992 through to 1998...
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