Posted by Brad @ 10:50 am on March 30th 2009

We’re Not Nationalizing Them

We’re just fiating their ledgers, raising their capitol, collectivising their losses, dictating their business practices, and firing their CEOs.

But it’s not like we’re running them or anything.


  1. All due respect to Doug, but I think “blackmail” is the wrong term here. As he seems to acknowledge in the post, once you accept the government check, you get all the baggage that comes along with it. This is like saying that workfare recipients are being “blackmailed” into doing labor (we will set aside the interesting question of whether blackmail is ethically wrong).

    Yes, this sort of precedent ought to annoy taxpayers, but the line is being drawn in the wrong place. Once you decide that the federal government can use public money to finance private industry, this sort of micromanagement becomes inevitable; there is simply too much political hay to be made by cracking down on corporate welfare chiselers.

    If we are going to get aggravated about this sort of thing, we’d better do so at the moment the checks are cut, not at the moment when the corporation itself is made to pay the price.

    Indeed, nationalization seems but a short step from where we’re at now. That doesn’t make nationalization wise; it makes this a bad path to have gone down from the start.

    Comment by Rojas — 3/30/2009 @ 11:23 am

  2. If it was a bank making a loan to an ailing company, they could set the terms of the loan. One of the terms might be “If that Wagneor guy is still in charge, you get no money.”

    To which the company could say “Alright, I don’t need your stupid money.”

    Now, if the government is the lender of last resort, then why shouldn’t they be able to set loan terms with public capital the same way banks do it with private capital? It’s not like, in this case, the entity involved is being forced to take the money.

    What annoys me more is the preferential treatment being shown to the Versace suit, $700,000 bonus crowd versus the blue collar employer crowd.

    And this is not because what is being asked of the car companies is unreasonable. It’s that what’s being asked of the banks, the originators of this crisis, the beneficiaries of pre-crisis largess, the major recipients of post criss government government coddling, is so little.

    Comment by thimbles — 3/30/2009 @ 5:57 pm

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