Tuesday, March 31, 2009
The blogosphere has been following the bailout and various other programs from Obama et al. I readily concede that on many issues, it is possible to make reasoned arguments on both sides. I am having a harder time with the current economic policies understanding why people think they are a good idea, are fair, or will ultimately be helpful. I am having an ever harder time understanding why most of the media isn't that interested in asking hard questions or being critical of these policies. I know that some are doing this, but it just doesn't seem to have gathered much steam.
It does seem that some non-traditional outlets are doing the hard work. Matt Taibbi (h/t to Mr. F and Mike) has had a few really good, well researched articles on the subject. Comedian, Jon Stewart has been willing to ask some hard questions of Jim Cramer (I'd love to see him interview Geithner). Hell, even Cracked Magazine gets it. The article is a week old, but still good. I love how he breaks it down:
Anyway, many of these banks own toxic mortgage-backed assets (for brevity I’m going to refer to these as ‘horseshit’ from here on). This horseshit is, amazingly, still considered an asset, although if anyone tried to sell it right now, they wouldn’t get a very good price for it, on account of its horseshitty attributes. The central problem here is that some banks own so much of this horseshit that if they valued it at what they could actually sell it for, they would effectively be bankrupt. In short, getting this horseshit off the banks’ books without making them bankrupt is our ultimate goal.
The government will provide loans for private investors to buy up the aforementioned horseshit from the banks. This would give these banks enough money so they could go about their business and not collapse like an old woman getting out of the bathtub. After that, if the horseshit goes up in price the government gets back their money and splits the profit with the private investors. If the horseshit goes down in price, the private investor takes a small loss, and the government takes a small to enormous loss, depending on various properties of the horseshit (taste? grittiness?)
There’s three problems with this plan. One, this involves buying horseshit from the banks for more than it’s probably worth, and keeping each bank’s current management intact, despite growing evidence that they’re colossal fuckers. Two, it involves the private investors taking a chunk of any potential profit while risking only a tiny portion of their own money–effectively another subsidy for wealthy jerks. And the third problem is that this plan may not be big enough. The private investors, even playing mostly with the government’s money, might not be willing to pay enough for this horseshit to keep the banks from going bankrupt. So the banks won’t sell, and we’ll all sit around picking at each other’s asses for a bit longer.
I am not suggesting that the revolution start now, but I would like to some serious questions coming from the MSM and some accountability demanded from the people.