The (DEEP) Money Pit
When the Federal government announced it would “set aside” about half of the $700 billion in taxpayer funds for the financial industry bailout, some people may have held out hope we wouldn’t need to “spend” the other half. Anyone who pays attention to how things work in Washington, though, could never have been so naive.
It was easy to predict, for instance, that companies from other industries would soon have their hands out. Now, it seems that the U.S. automobile industry will be one of the first non-financial companies to line up for some tax dollars. Credit card companies, such as American Express, may also begin getting in on the act, though the line between non-financial and financial is a bit blurry for these guys.
I’ll even go out on a limb: the homebuilding industry won’t be too far behind. After all, an over-supply of housing is at the root of this crisis.
What’s really interesting is the legislative horse trading going on. Apparently, bailing out the automobile industry is going too far for some Republicans and Bush (though I am surprised to learn there is such a limit). The auto industry bailout is acceptable to the Democrats, though. So, something has to give, right? How about throwing a Columbian free trade agreement into the mix?
The Republicans want a deal, the Democrats don’t. Even though these two events – an auto industry bailout and a free trade agreement with Colombia – have very little to do with each other, it appears the Dems may be willing to cave on the free trade agreement as long as Bush caves on the auto industry bailout.
It’s interesting to observe the horse trading, but it’s impossible to ignore the reality: we’re on the verge of nationalizing the financial industry and the auto industry. For example:
To forestall a voter backlash, Obama aides and Ms. Pelosi separately made clear they intend to impose significant conditions on federal aid. Auto makers would have to offer the government equity stakes or warrants, one Obama adviser said, and would have to accept the same rules on executive compensation that financial-service companies have swallowed with the Wall Street rescue.
It is becoming clearer almost every day that the “financial industry bailout” is badly misnamed.
NM
June 2nd, 2009 at 2:50 pm
I also agree with u that it is becoming clearer almost every day that the “financial industry bailout” is badly misnamed.