I was watching CNBC today when I heard one of the guest today use the term “socialize the losses” when talking about bailing out the auto industry. Of course we all know that he is right and that’s what the US government has done with the Financial industry and are now looking towards the auto industry to do the same thing. But he said it with such a negative connotation that it really caught my eye. I know free market idealist have really been bashing the bailout and so have people on the other side such as writer Naomi Klein with her new article in Rolling Stone “The new trough“.
There is a good amount of people that believe that the bail out was ill conceived as well as not an ideal solution. I agree with both of those premises but I also believe that it was the right thing to do for the short term, only implemented in the most bone headed way possible. We have to worry about jobs and not just punishing mishandled corporations. If we allow GM alone to go under they are predicting as much as 3 million jobs could be loss, from the corporation and it’s subsidiaries, to the hot dog vendor on the corner. That would be a disastrous hit on our economy and something that can not be allowed to happen.
This bail out could have gone so much better but so far has proven to be another wayward episode in the life of the Bush administration. We had a model that has already proven to be a successful way to ease us into the bail out. All we had to do was look at Britain and their bailing out of Northern Rock and other financial institutions. They have one thing that was implemented that our federal governors failed to do, and that’s hold these banks accountable. The government is now members of the boards of the financial institutions that they helped bail out. The most important business and mandate of these institutions is to pay back the tax payers, then the investors, and then the CEO’s of the companies. In America we have companies that have been bailed out billions of dollars still throwing lavish parties for the only reason, “that they were planned beforehand”. This is ridiculous, our bail out money is buying us no leverage against these institutions. We should be partial owners and controllers of these financial and automotive giants and if they don’t like it then we will allow you to fail, it’s the American way. These companies need a serious spanking and Henry Paulson is not giving it to them. Maybe he is to much of a buddy to the financial industry and doesn’t want to risk not being invited to anymore social gatherings. Whatever the case this buddy system that we have been doing with the bail out has to end and has to end now. With our money comes accountability and if you don’t like that, good luck with digging your company out a ditch.