I'm not kidding. What if the Fed and Treasurey let market forces do what they will to Wall Street? From a policy perspective, I'm a stalwart opponent of corporate bailouts because it runs contrary to our current national free market/deregulation policies. Business has spent a generation lobbying for less government oversight on the premise that a free market is more productive.
Corporate America can’t have it both ways. Either there is the give-and-take of a social contract between government and business or there is a free market. For the free market to actually work businesses, no matter how big, must be allowed to fail otherwise there is no incentive for business to succeed.
It was a mistake to bail out Chrysler. It was a mistake to bail out the airline industry. And, despite the dire current situation, I still think it is a long-term mistake to bail out Wall Street. Never mind that the US government doesn't have $700,000,000,000 to bail out anyone. Technically I’m more solvent than the US government right now.
But on a practical-John-Maynard-Keynes-the-long-run-we're-dead-level what would happen if Wall Street was allowed to fail? I’m really asking because I really don’t know. As I said in the begining I'm inclined to say no bail out of any kind.
Chrylser may have paid back its loans but it also sold itself to a German company under the false front of a "merger of equals." Daimler then sold Chrysler to a holding company. The domestic auto industry is in essentially the same place it was in 1980.
The airlines took their $15,000,000,000 and promptly laid off thousands of employees. The industry has spent the last seven years becoming more customer unfriendly than ever. This was truly one of the most disgraceful wastes of tax dollars ever.
Why should we expect the Wall Street bail out to be any different. I expect value in return for tax dollars. Paved roads, good schools, low crime, etc. What the f*$# will I get from giving Wall Street $700,000,000,000?
