The Bailout

Posted on 09/25/2008 | 2 Comments

(Community Matters) A friend passed along a light-hearted email this morning passed on by a favored Austin musician. The email suggested investing the $700B in a citizen’s “we deserve it dividend.” I empathize with the sentiment. And, I hope people get the severity of the situation. We’re talking wiped out pension plans, failing banks, failing companies, severe unemployment, devastating circumstances. It isn’t a question of if re: the bailout, it’s how.

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2 responses to “The Bailout”

  1. Unknown's avatar DanC | 09/25/2008 at 8:11 PM | Reply

    “We’re talking wiped out pension plans, failing banks, failing companies, severe unemployment, devastating circumstances.”I wonder how true that is. It would be true if there were NO financial industry. It might happen if all financial institutions fail, but not if only SOME of them fail. Is there evidence that they are all going to fail without a bailout? People like you and Henry Paulson may not be able to imagine a world without Goldman Sachs, but I can. And even if they do all fail, what is to prevent new banks from springing up? That’s the beauty of a free market. Some firms fail and new firms are formed to meet a market need.There were bank failures in the early 1930s, but that wasn’t the only cause of the Great Depression. If we need government action to prevent a slowdown in economic activity, I would much prefer we borrow from another New Deal program: the WPA. Spend on rebuilding our country’s dilapidated infrastructure. That would put people to work and keep the economy going, while also giving us something of value for the future.We once had a vibrant textile industry in the United States. Now we don’t. Did the government rescue those old textile companies? No. Does that mean we can no longer buy textiles or clothing? No. New firms sprang up (in other countries) to meet the demand. How is this situation different?I find this whole bailout incredibly depressing – worse than the war in Iraq. I wonder if all those people who drive around Austin with anti-war bumper stickers are now going to put anti-bailout bumper stickers on their cars. They should.

  2. Unknown's avatar DanC | 09/26/2008 at 6:59 AM | Reply

    I wonder how true that is. It would be true if there were NO financial industry. It might happen if all financial institutions fail, but not if only SOME of them fail. Is there evidence that they are all going to fail without a bailout? People like you and Henry Paulson may not be able to imagine a world without Goldman Sachs, but I can. And even if they do all fail, what is to prevent new banks from springing up? That’s the beauty of a free market. Some firms fail and new firms are formed to meet a market need.There were bank failures in the early 1930s, but that wasn’t the only cause of the Great Depression. If we need government action to prevent a slowdown in economic activity, I would much prefer we borrow from another New Deal program: the WPA. Spend on rebuilding our country’s dilapidated infrastructure. That would put people to work and keep the economy going, while also giving us something of value for the future.We once had a vibrant textile industry in the United States. Now we don’t. Did the government rescue those old textile companies? No. Does that mean we can no longer buy textiles or clothing? No. New firms sprang up (in other countries) to meet the demand. How is this situation different?I find this whole bailout incredibly depressing – worse than the war in Iraq. I wonder if all those people who drive around Austin with anti-war bumper stickers are now going to put anti-bailout bumper stickers on their cars. They should.

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