Remember that crazily catchy Lou Bega tune from a few years ago, “Mambo No. 5?“
Click here for a reminder (but do so prepared to be hearing the song in your head for the rest of the day).
Well, President Bush appeared with Treasury Secretary Henry Paulson today to introduce us to Bailout No. 5.
It’s Citigroup, which became the fifth private U.S. institution to receive a government bailout this year, following Bear Stearns, Freddie Mac, Fannie Mae and AIG.
The Treasury, the Federal Reserve and the FDIC said the federal government would guarantee roughly $300 billion in losses at Citigroup on its troubled assets and inject $20 billion more into the bank. That new capital injection was on top of the $25 billion given to Citigroup weeks ago as part of the $700 billion bailout passed by Congress in October.
Come to think of it, we’re not really sure how many private U.S. institutions have received a government bailout this year, since the Treasury Department won’t tell us.)
And the bailouts could continue for as long as that Lou Bega song lingers in your brain: The Big Three are awaiting Bailout Nos. 6, 7 and 8, and President Bush said this morning that “If need be, we’re going to make these kind of decisions to safeguard our financial system in the future.“
For a reminder about why all this is necessary, read Rich Galen’s most recent column on the subject.
And one more thing: Make plans now to be sure you pay your taxes on time next year. The government will need it to give away.
Editorials are meant to influence public opinion. Graded on how influential this editorial is on swaying public opinion in favor of the bailout, I’d have to give it a big fat F.
If I wasn’t against the bailout before I read the Times’ editorial, I sure would be when I got done reading it.
As I told my reader, even if I agreed with the premise of the editorial, the reasoning on which it is based would still be some of the worst I’ve ever heard.
Let’s take it apart:
Congress has given Detroit’s flailing automakers less than two weeks to come up with a restructuring plan that would justify giving them tens of billions of taxpayer dollars and ensure that they have a reasonable path back to profitability. We hope it is a good plan, because the lame-duck Congress does not have a choice.
The Times argues that Congress should fork over the money, regardless of whether there is even a reasonable plan for spending it. With an attitude like that, perhaps the Times’ editorial writer is planning his own run for Congress. And why not? He’s already comfortable giving away other people’s money.
Michigan’s three car manufacturers have said that they would go bankrupt this year without an infusion of taxpayers’ money. Failing to provide it would be a truly irresponsible act that could obliterate one or more companies, potentially causing other bankruptcies and costing many hundreds of thousands of jobs.
No one argues this. But as I said in the column this morning, so would – so ARE – the slow bleeds and failures of other companies causing “other bankruptcies and costing many hundreds of thousands of jobs.” Journalism, construction and real estate are just three examples of industries that are hemorrhaging jobs.
Unpalatable as it seems to underwrite the proven record of failure of Detroit’s automakers –
Hold it right there. “Underwrite the proven record of failure”? Was the editorial writer somehow impaired when he wrote this?
Underwriting a proven record of failure isn’t just “unpalatable.“ It’s ludicrous. In fact, it’s so ludicrous that only the federal government would consider doing it.
– Congress must provide sufficient money to shore them up until the Obama administration takes office. Then, the new president and new Congress can decide how to manage either a rescue package with tight strings attached or a bankruptcy process that ensures the fallen companies have a reasonable shot at picking up the pieces.
So the Times advocates bailing out the Big Three if even only for two or three months, and bankruptcy – and all the things they are saying would be disastrous now – might still happen anyway? So basically the Times is advocating pouring $25 billion of taxpayers’ money down a hole simply to delay what they themselves admit is likely the inevitable.
Burning $25 billion taxpayer dollars? How is that in any way defensible?
I reiterate that the question of the Big Three bailout is a philosophical quandary, not a practical one. If Congress bails out the Big Three, then there is precedent for Congress to bail out a dozen or more other industries. Is that the direction we want to go as a country?
Maybe some people do. Maybe a lot of people do. I don’t.
But regardless of what your personal feelings are on the bailout, my point in the column was that if we go in that direction, we can’t call ourselves capitalists anymore.
Finally, I appreciated all the e-mails. I appreciate all interactions with readers, regardless of what they have to say about my work. It’s just nice to know people are reading it.
I just stumbled across an “instant editorial” on the Ft. Myers News-Press web site encouraging President-elect Barack Obama to choose New Mexico Gov. Bill Richardson for Secretary of State.
You know that Obama’s former rival, U.S. Sen. Hillary Clinton (D-NY), has all the buzz and seems to have all the momentum. Thanks to the wonders of anonymous sources, Obama is now expected to make Clinton’s nomination to the post official after Thanksgiving.
SIDEBAR: Check out the lead in that article. Never mind that he isn’t president yet; Obama is already pulling off “daring and difficult diplomacy.“ The author of that article must have had to stop a few times while writing it to wipe his teary eyes. END SIDEBAR
But the News-Press’s David Plazas makes a case for Richardson that is as powerful as it is succinct:
Richardson is New Mexico’s governor (executive judgment), he’s been a congressman (legislative experience) and he’s served as the Clinton Administration’s ambassador to the United Nations and energy secretary (national security credentials).
The experience of Sen. Hillary Clinton, who’s expected to get the nod, does not come close to equaling that of Richardson, who once negotiated a hostage release in the Middle East.
I couldn’t agree more.
It doesn’t look like Richardson is going to be the pick. And that’s unfortunate—not just for the missed opportunities Obama is passing up, but also for the mess he’s setting himself up for with Clinton. I understand the “team of rivals” concept. But considering some of the things Clinton said about Obama during the course of the campaign, treating Clinton like any other rival would be like treating Michael Jordan like any other basketball player.
Read the rest of the “instant editorial” endorsing Richardson here.
As I was writing my column for tomorrow’s paper about the Big Three bailout pursuit, I began wondering why we haven’t heard much from Michigan Gov. Jennifer Granholm about this issue.
As it turns out, she has been very vocal about her support for the bailout—the national press just hasn’t been covering it.
So why haven’t we seen her in Washington this week? Everyone involved in the domestic auto industry is there, lobbying for the deal. But no sign of Granholm.
I checked out her web site and realized that she was actually in the Middle East this week on another trade mission.
Yes, that Middle East—as in, Jordan, Israel, etc.
Her web site detailed the trip and said she was fulfilling her promise to go anywhere and do anything to promote Michigan and try to secure jobs for and investment in the state.
That’s laudable, I thought. And given Michigan’s terrible economy, that’s what she should be doing.
But to do it the week that the domestic automakers were trying to salvage a lifeline for the companies that employ a half a million people in and around her state?
Bad move.
I was already writing a blog post about this in my head—absentee governor, etc.—when I read that she was actually cutting her trip short to appear in D.C. to join the lobbying efforts in favor of the bailout.
Good move.
Keep an eye out for my column on the Big Three bailout this weekend: Our friend Ron Gettelfinger is going to make an appearance. If you live in this area, you can read it in the print edition of the Opelika-Auburn News tomorrow. If not, I’ll post a link to it here.
