Back before Amy & I had gotten married, my spending patterns were something of a running joke. I was kind of a tightwad and rarely bought much in the way of stuff, but I blew a lot of money eating out, watching movies, and the like. So, I’d explain that I didn’t mind spending money, “as long as I didn’t have any assets to show for it.” It was a little like Brewsters Millions. While it worked well enough for me, it is no way to run a national economy.
But, it seems like the U.S. is going down that path with Citigroup being the latest business to successfully petition the U.S. government for financial assistance.
The complex plan calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company. The plan, emerging after a harrowing week in the financial markets, is the government’s third effort in three months to contain the deepening economic crisis and may set the precedent for other multibillion-dollar financial rescues.
So, if I have this straight, GM is not worthy of a bailout because they actually make stuff, pay average people about $28 per hour, and their executives arrived in Washington on corporate jets. I have not seen information on the Citigroup contingent’s itinerary or information on how they are compensated.
I don’t pretend to know how to get out of this financial thicket; but pouring money down the rat hole of the financial services industry while withholding money from manufacturers with infrastructure in the U.S. that actually makes stuff seems a little skewed.
Update Former Secretary of Labor, Robert Reich, has a column on the theme of Why Citigroup and not General Motors.
Nonetheless, Citi is about to be bailed out while GM is allowed to languish. That’s because Wall Street’s self-serving view of the unique role of financial institutions is mirrored in the two agencies that run the American economy — the Treasury and the Fed. Their job, as they see it, is to keep the financial economy “sound,” by which they mean keeping Wall Street’s own investors and creditors reasonably happy.
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