03 February 2009

Bailouts Past and Present

Here's a funny article by BBC News regarding whether government bailouts have worked.

And I do mean "funny" - it reads like a stand-up routine. [Any emphases here are mine.]

It lists the US airline industry as a "successful example" of a bailout:
The government received shares in the airlines in return for guaranteeing loans to them and also charged fees for participating in the scheme.
Hmm. "Scheme," indeed! All but a few airlines are still running in the red, if I'm not mistaken... although I see that taxpayers made some interest off the loan. Again, hmm. Should we really feel good about siphoning money out of the private sector?

It only gets better from there!

The UK nationalized Rolls Royce in 1971; a professor comments, "The idea was that the government could later withdraw, but it never did as planned."

Are you laughing out loud yet? Because here's what that segment concludes with: "There is strong evidence that nationalisation leads to lower efficiency," says Professor Pandit.

Then there are statements like this regarding the S&L crisis in the US, by Professor Vaughan Williams: "To get back 80% on what were bankrupt assets could be called a success."

Okay, end of comedy.

Lest you get the impression that bailouts are a 20th century invention, the article ends with what happened during the formative years of our country, in 1792: "With the value of bonds collapsing, the first Treasury Secretary Alexander Hamilton told banks [, which were collapsing after one banker's corrupt scheme had gone awry,] to accept bonds as collateral for loans, which were then underwritten by the government."

Hamilton was a cad and a scheming, power-mongering High Federalist.

He played on honest people's lack of suspicion.

And it's still happening today. Please watch these Secretaries who are being installed. Keep open communication with your representatives and let them know how you feel. It's only through speaking more effectively than lobbyists' money and acting more effectively by voting honest people into office that we will regain control of our government.


Ann said...

Thank you for this post...extremely informative! I love reading your thoughts!:)

Jennifer Dunn said...

I love how you break things down into logical points.

Carissa said...

That is the reason all this stuff happens in "crisis mode". Because they would lose the debate and the people wouldn't go for it. Nationalization only sounds like a decent idea to some when we're faced with the alternative of certain death and misery.

We need to be especially on guard of what our government does during "national emergencies". Including the present economic crisis.