Originally posted in the Washington Post, Thursday September 25th.
A Bailout We Don’t Need
Now that all five big investment banks — Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley — have disappeared or morphed into regular banks, a question arises.
Is this bailout still necessary?
The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They’re called “loans.”
→ Read the rest of the article at the Washington Post
James K. Galbraith is the author of “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.”
September 30th, 2008 at 1:36 pm
I heard a discussion by an economist from Carnegie Mellon University saying that the the whole bail out thing is a scam and that there is no real emergency. His solution was to offer the companies who need them, government back loans which they must repay with interest. Loan repayment is first, no dividends until the loan is repaid, and no golden parachutes for the very executives who profited from the current situation. Why am I not hearing this as any part of a solution? Thank you for your web site and your humor - good heavens - look out there - is that a piece of the sky falling?????
Blessings, Medora G
October 3rd, 2008 at 10:26 pm
Medora,
You are so right. The simplicity of your plan is so beautiful. If only politicians read your comment instead of Paulson’s three page shell game scheme. As Naomi Klein describes in The Shock Doctrine Disaster Capitalism is giving public funds to private businesses. They made bad loans and now wqe are bailing out the largest bankers in the country instead of helping to create green jobs and rebuild our infrastructure and provide relief to tax payers by providing national health care at an affordable price like the senators have. Now there is no money left for social programs. Your “solution” to “offer the companies who need them, government back loans which they must repay with interest” is more than generous. As you suggest “Loan repayment is first, no dividends until the loan is repaid, and no golden parachutes for the very executives who profited from the current situation.” I will send this to my congressional and senate representatives because although they already passed the bill to offer 850 billion they will be back for more with another cry of a coming disaster and probably before Bush leaves office with a bankrupt nation as his legacy.