This really doesn't sound much different than what Bush and Paulson did with TARP1. http://www.nytimes.com/2009/02/10/business/economy/10bailout.html?pagewanted=1&_r=1&hp
Figured there was some infighting, didn't know it was Axelrod. Figured it was Baer. Unbelievable Geitner would win. You f'd up Obama. Our currency is doomed, and for what? Like we need Citi. Gimmie a break. On a side note. Good try Axelrod
"He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid." This really is scary - only a matter of time before we become a socialist country. Trying to save people by wiping out their value in the companies they are invested in? Nope - just keep us is power and we will be your Robin Hood.
The wiping out of shareholders comment probably relates to the idea of creating another RTC. The RTC would take over the bank, wipe out everyone, buy the bad assets at a certain price which in turn recapitalizes the bank and is then set free back into the system. Of course this makes sense which means it won't happen. According to the Capitalist Creed, "Privatize the profits, socialize the losses," taxpayer money is the more ideal way to fix things. We have the Underpants Gnomes working at the Federal Reserve and Treasury Departments. (can't believe there was a wiki definition for that). Step 1 Use taxpayer money Step 2 ????? Step 3 Financial system fixed
Change? http://www.nytimes.com/2009/02/10/business/economy/10bailout.html?pagewanted=1&_r=1 "And for all of its boldness, the plan largely repeats the Bush administrationâs approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis and failed to foresee many of the problems plaguing the markets."
In the short term the banks have to be nationalised, restructured, and sold back to the private sector. It's just a form of bankrupcy, in the same way debt is restructured and assets sold off in a regular bankrupcy. The terms 'nationalisation' & 'socialism' are being misused i think.
If it is a form of bankruptcy why not just let the existing system handle that? I am not convinced the government will let go of the companies once they have them. I think too many people think it is a good idea for the gov to tell the execs how much they can make. I construe socialism with the government ownership and control of private business. As the people no longer control the gov, I cannot agree that it is nationalism.
First, I think zzt is right. The key factor is the time issue. Karl Marx did not want the principles of socialism to exist for a short period of time (say 2 to 5 years) and then revert back to some other system - particularly capitalism. Marx felt the principles of socialism should exist "forever." I don't think anyone (aside from the tax hike fanatics that see almost any tax hike as "socialism") feels the govt. wants to be doing this "forever." I think we agree on the nationalization issue. Besides - countries would want to "nationalize" profitable and productive concerns. Like Exxon-Mobil, which makes billions - not AIG and BAC (w/MER and CFC in its bowels) which loses billions. In other words, with nationalization, the govt says "give me your valuable assets - or else ..." ... not "give me your most pathetic, money losing, toxic debt ridden companies - or else ..."
One more point - Do not forget that around six months ago, we went from leaders - including Paulson - saying "all is well" one day and turning on a dime and saying "gotta have $700 billion - right now." As the public gets more and more acclimated to this environment - it may be better able to handle some "name brand" bankruptcies. Not sure if we are there yet. Definitely weren't there 5 or 6 months ago.
Yep, it's exactly the same. Even the various punitive measures that weren't in TARP I are completely toothless.