Man Bites Blog

SenJohnMcCain tweets:

Chrysler finally filing for bankruptcy! Wish they would have done it months ago as I called for - could have saved taxpayers $26.7 billion!

I’m not so sure.

1. There is probably value in that the bankruptcy is coming now, when the economy is more stable, than last fall. 
2. It’s not as if this money was flushed down the toilet.  It went, in part, to pay the salaries of Chrysler employees for the last few months and companies that do business with them.  In that time, some of them may have been able to start to adjust to the possibility of life without Chrysler.  Some of them may have been on welfare or unemployment otherwise.

I’m not certain(morally or otherwise) that these benefits were worth $26.7 billion.  But I don’t think that Chrysler ultimately filing for bankruptcy proves that the government money keeping it alive the past few months was wasted.

What follows are my poorly informed and probably over-emotional “thoughts” on the AIG bonus scandal.  Nevertheless, I need to get it off my chest.  I make no claim that this is any kind of positive contribution to the public discourse.  If you’re like most people, you’ve probably read enough about this from people who don’t know what they’re talking about.  I am not an exception, so feel free to move along.  Others can follow me below the fold…

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Problem:  It may be the case that the bailout of the financial industry was more vital to the economy than bailing out the auto industry.  But the idea of bailing out Wall Street financiers but not auto workers doesn’t make one feel good, since the direct consequences of no bailout will probably be more devastating on a human level to auto workers, and Wall Street financiers can more credibly be blamed for their fate than auto workers.

Solution: Let’s swing a trade.  Bring the auto workers in to run Wall Street, and send the Wall Street folks to Michigan to try to re-build the auto industry.  They’re so smart; they should be able to do it.

Let’s say that some version of the bail-out rescue package passes with the support of both presidential candidates, and continues to be opposed by the public, in part because of the immense power it would give to the Secretaryof theTreasury, now Henry Paulson, then whomever the next president chooses.

It seems this would open the presidential election up to an insurgent third party candidate who would pledge to appoint a Secretary of the Treasury who would not use this power.

Watching the Today show, I head one finance person in Chicago note that we had to get this bail-out passed because we need to prop up the financial system since we’re all in this together.

This may be true as a factual matter, that our well-being is dependent on the success of the finiancial system.

But I think there’s a deep feeling that this is not a reciprocal relationship.  Why have corporations been shipping jobs overseas?  Because “Wall Street” rewards them for doing so?  Why are there lay-offs?  Why can’t we get more than a 3% raise?  Why did the free coffee get taken away?  Because “Wall Street” rewards these behaviors.

Now “Wall Street” is coming to us and telling us we need to sacrifice because “we’re all in this together.”

Thing, is, most of us feel like we’ve already sacrificed for Wall Street’s benefit.  They were more than happy to roll in money at our expense. 

And most of us suspect that when and if the market bounces back, these folks aren’t going to be particularly eager to help us out if we need it. 

This doesn’t mean the bail out isn’t needed, but explains people’s visceral reaction to it.  I don’t know if we need a “perp walk,” but I think people need something to demonstrate that we’re not being played for suckers.