The problem with the government bailing out the failing banks and other massive corporations can be seen in a single statement by President Obama: “air out of golden parachutes.” This is what the president is now pledging to do on behalf of the American tax payers. He is going to limit the salaries of government aided executives to $500,000 a year. This, we have been told, will “strengthen the public trust.”
At first glance, I thought this was a great idea. Like many people, I find it preposterous to see some of these executives redecorating their offices (with $1,400 wastebaskets), taking bonuses, and treating themselves to posh resorts to get away from the stress of Wall Street life. Ordinarily, these activities would only be the concern of stockholders and disgruntled employees. However, due to this massive bailout situation, we as taxpayers have begun to concern ourselves (and rightfully so) with the day-to-day activities of these companies and their executives.
When I sit back and reevaluate the situation, I realize how dangerous these bailouts have become. The government is now interfering and controlling how private companies conduct their business. As if the government was not merely a stock holder or federal business regulator, but was actually controlling the board of directors for these companies. Did we say goodbye to the free enterprise system when we bailed out these companies? Did we sign the death certificate to capitalism? I certainly hope not.
Where do we go from here? Have we gone too far? Only time can tell now. I believe what we have done to ourselves is not irreversible, but will take some time. For one, we need to put an end to bailing out companies. Two, we need to incur penalties on the companies that are not repaying the funds in due time. Obviously penalties in the form of fines would be redundant, but penalties such as even stricter pay for top level executives could possibly work. By due time, I am talking about a time frame of no longer than five years. Efforts should be made within the first two years.
Relating to the aftermath, once these companies have completely paid back taxpayer money, any and all restrictions should be removed. Banking regulations are partially to blame for why banks failed in the first place. If they fall into the same predicament again, than we need to be ready to accept the outcome and just tell them to go screw themselves. The government cannot afford to be in the business of buying private companies and we cannot afford for the government to have any more control over our lives than they have already commandeered.
Open Thread
13 hours ago
It is my understanding that the government used bailout money to buy stock in the failing financial institutions. Which amounts to nationalization of the industry? Hood winked, would be a good way to say what has happened to the American people. Our government fed us a bunch or x!c$##@$. (From both sides of the fence)
ReplyDeleteThis problem did not start last year or even in the last few years. It started in 1999 when the congress (I believe it was republican congress) passed the Gramm-Leach-Bliley Act and signed by former President Clinton. (Former FED Chairman Alan Greenspan also approved this of this Act). What they did was repeal part of the Glass-Steagall Act of 1932, which was put into place after the great depression, to prevent banking from becoming investors. Congress has had plenty warning of the coming Financial Tsunami, and they ignored the warnings.
The government taking a more controlling hand in businesses can be an ominous thing, since it doesn't fit with our national philosophy of capitalism. However, doesn't restricting what companies can pay themselves and declare thusly to some extent what people can do with their money, stupid or not, mean a heavy hand and control in business and go against capitalism as well? I don't applaud restricting salaries, as much as I agree no-one needs 1400$ wastebaskets. The ideal of capitalism is for business to run itself, and to make as much money as you can on your own means without interference. So this, "wise control" is at least as ominous as bailouts, if not more so.
ReplyDeleteThis is a good post and I tend to agree with you on most if not all of it. It does seem that the american people are getting effed us the anus when it comes to the bailout. I find it hard to understand what these companies have done to deserve this amount of money. I say screw these companies and give the people a bailout. If you want to stimulate the economy how about you give us some money and then we can go spend it. I guess what bugs me the most though is that we the people really dont understand what the bailout plan is all about. Or maybe we do and it really is just that obvious as far as to us getting panned.
ReplyDeletethe government is putting its hands in too much nowadays. this was confirmed to me when our right to bare arms was on trial. even though it was found unconstitutional "at the time being" u cant help but wonder how these mother@^$@ers have the audacity to try such a right. but in response to the bail out i agree. we shouldnt have to pay to bail out companies when we individually need bailing out ourselves. i personally think it has a lot to do with the "revolving door" effect. everyone owes each other favors and until that changes the policies will remain.
ReplyDeletecheck out this article over at WSJ:
ReplyDeletehttp://online.wsj.com/article/SB123396621006159013.html
The bailout plans don't even come close to achieving their goals because they bailout a company that planned on going under with CEOs that are awaiting their golden parachutes. It is like being on the Titanic and trying to plaster the gushing wounds while the captain and crew are jumping on the lifeboats. We think by giving them the plaster and telling them to fix the wounds they will save all the people. So it is a plan that kicks in too little too late. Also this nation has been a capitalist nation as much as it's been a democracy. We like to throw terms that we find more solid and ideal to appear to be the "Greatest Nation on Earth" when in reality we are much closer to a socialist republic.
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