November 12, 2008 at 10:13 am (Politics) (, , , , , , )

This is ridiculous.

When the bailout was first suggested, the plan had been to use this money to purchase ‘toxic debt’ so that the government could wait until the inevitable recovery, sell it, make a profit, and help out the financial market.  Further, the government could then decide unilaterally to hold off on foreclosures, letting people keep their homes.  I explained bits of this in “The Blame Game.”

Instead, they started by using the funds to strong-arm the banks into accepting partial Government ownership.  Then, as seen in the first link, they decided that no, they wouldn’t go with the original plan.  They’d keep buying stock in the various banks, and maybe put the money into other industries that hadn’t originally been part of the plan.

Ladies and gentlemen, I’m on the board of a small company that’s owned by a non-profit organization.  My parent-organization files for grants on a fairly regular basis.  If we had asked for grant money to build a local arts center, and instead used it to buy old masters for investment, we’d be hauled in on charges of fraud.

The only difference between that fraud and this one is that the taxpayer is forking over the grant money, not a single wealthy philanthropist.

Congress shouldn’t be worrying about whether or not to bail out the auto industry, they should be telling Paulson to give back their $700 billion dollars, give the banks back their stock, and either use the money for its original purpose or find a replacement who will while he’s on his way out the door.

But somehow, I doubt he will.  Because honestly, I think the current Congress (and the next one) are a little too fond of the idea of the government owning significant portions of the biggest banks out there.  This is why I didn’t have too big a problem with the original bailout plan – it relied on the free market, which works pretty well when Congress doesn’t screw around with it, to get us out of this.  Instead, the new version looks suspiciously like an attempt to get the Republicans to agree to nationalizing numerous industries.

And that’s not the *free* market system at work….


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