Another day, another eighty-five billion dollars. If you’ve had your back turned, or your earbuds in, or you’ve been transfixed by Sarah Palin’s boobs the last week or two you may not have noticed the Federal Reserve opening its checkbook. $85 billion for insurance behemoth AIG, $70 billion more to feed into the market so that credit won’t totally evaporate, and last week’s credit lines of up to $100 billion each to bail out mortgage guarantors Fannie Mae and Freddie Mac. Congratulations, fellow taxpayers – for the low, low price of $350 billion we are now the proud owners of three huge, insolvent companies.
If you’re wondering how this is a good investment, the answer is, it’s not. It’s not so much an investment as it is a protection shakedown. We propped up three massive entities with over a quarter of a trillion dollars in ballast to prevent them from toppling over and squashing us all. So what do we do with our still-unsquashed selves now?
Hell, I don’t know. Consult somebody smarter than I am – namely, former U.S. Department of Labor Secretary, current U.C. Berkeley Professor of Public Policy, frequent economic commentator for NPR, CNBC and other such outlets, Robert Reich. Fortunately for my purposes, Dr. Reich also keeps a blog (newly added here to the C&B blogroll), whereupon he posted about this spate of bailouts back on Monday, while AIG still teetered. The crux:
What to do? Not to socialize capitalism with bailouts and subsidies that put taxpayers at risk… the best way to rebuild trust is through regulations that require financial players to stand behind their promises and tell the truth, along with strict oversight to make sure they do.
We tell poor nations they have to make their financial markets transparent before capital will flow to them. Now it’s our turn.
Read his entire post here.
Tags: economic crisis, economy, ethics, NPR, Robert Reich, Sarah Palin
