Government 'bailouts' saved a lot more than just CEOs' jobs
While the furor over the "bailouts" seems to have diminished, there are still murmurs of protest, mostly directed at the CEOs and other VIPs whose jobs were saved. Seemingly overlooked are the hundreds, probably thousands, of other jobs that were saved, the middle managers, the sales reps, the clerks and custodians, etc.
A frequently heard question is: Why should the taxpayers supply this money?"
I believe the answer can be found in an analogous situation. Most homeowners carry insurance covering fire, storm, and/or flood damage. Fortunately, very few of us have the misfortune of having to collect the benefits of these policies. The many, (taxpayers/policy owners) protect the few, (job threatened/burned out). Howard P. Fox Scio Township
Comments
outdoor6709
Fri, Nov 4, 2011 : 2:15 p.m.
Where is the anger towards the government policies that helped lead to the problem? FannieMa & Freddie Mac officials, who were connected to government go millions in bounses, while pushing policies that were doomed to fail. Freddie & Fanie just asked fro a $6 billion bailout and the excs got about $1.2million each. <a href="http://www.politico.com/news/stories/1111/67536.html" rel='nofollow'>http://www.politico.com/news/stories/1111/67536.html</a> Where is the outrage? Oh I'm sorry, its the government of the people, by the people, for the people who did this. Doubl standard anyone? You might like to read about tattempts to reform Freddie & Fannie. <a href="http://www.bucksright.com/bush-proposed-fannie-mae-freddie-mac-supervision-in-2003-1141" rel='nofollow'>http://www.bucksright.com/bush-proposed-fannie-mae-freddie-mac-supervision-in-2003-1141</a>
NoSUVforMe
Wed, Dec 29, 2010 : 4:39 a.m.
Unfortunately, CEOs don't pay a fair share of taxes even when there is no bailout. So, the rich get richer and the middle class is squeezed. This trend accelerated with Republican tax cuts for the wealthy while driving us deeper in debt. Now that we are in debt, Republicans will start to rip away at the safety nets for the elderly - Medicare and Social Security. It has been their plan from the beginning. CEOs get rich, the middle class is diminished. We are left with rich and poor. What a great country we live in when the people let this happen.
AlphaAlpha
Mon, Dec 27, 2010 : 10:39 a.m.
Likely the author of this opinion is, or is close to, a banker. 2010-12-27 update: WSJ reports ~100 banks which got about $5 billion of your tax dollars in TARP money are now close to bankruptcy. To quote Ritholtz: "There are many many reasons not to bail out failed banks: Moral Hazard, rewarding the incompetent, thwarting legitimate competition, reducing incentives to be risk averse. We can add another to the list: Throwing away billions of dollars..." Your thoughts, Mr. Fox?
Mick52
Mon, Dec 27, 2010 : 12:42 a.m.
I doubt many jobs were saved. Prolonged maybe. The best visible indication of a positive from the bailouts around here is the resurfacing of quite a few miles of decaying roadways. So those jobs were extended, but when the money train stops, who will keep those jobs funded. GM and Chrysler might survive, but until I can see they will, its Ford or other for me, based on cost, reliability and financing. I'm not saying it was a good idea, we will be paying for these improvements for a long time. But they may have put off some serious increases in taxes that were proposed to repair the roads. Here is an article that shows how that was proposed. The tax and fee increases in the bills introduces were quite high, and we almost got toll roads: http://www.mlive.com/news/index.ssf/2009/05/proposed_laws_would_raise_mich.html In addition, Rep Dingall wanted to raise federal gas tax too, by $.50 gallon: http://blog.mlive.com/annarbornews/2007/08/dingell_says_he_will_propose_g.html How about that, getting hit up from the state and the feds.
Speechless
Sun, Dec 26, 2010 : 11:26 p.m.
This letter is seasonally so very timely!&nbsp; The recent bailouts, it seems, play out a lot like It's a Wonderful Life, with only a few minor differences: This time around, the top Bailey Building & Loan shareholder, Henry Potter (Lionel Barrymore), gets all the bank bailout money, instead. Depositors at Bailey, along with other community members, generously provide the bailout donations, giving what they can afford to Potter &mdash; rather than to the seriously struggling George Bailey (Jimmy Stewart), who goes back to the bridge and jumps in again. Potter then leverages the bailout cash to forcibly gain direct control of all financial operations at the Bailey institution. Finally, Potter proceeds to foreclose on a series of home mortgage loans that the late George Bailey had provided on very good terms to numerous depositors. Other than just that, it's really pretty much the same story.
FredMax
Sun, Dec 26, 2010 : 9:47 p.m.
A responsible person buys insurance in order to be eligible to make a claim in case of catastrophy. Apparently this is analogous to a poorly run business that receives a free bailout from the government.
outdoor6709
Fri, Nov 4, 2011 : 4:48 p.m.
You are correct. In the modern day world of overintrusive government, collectivision is the fad. Interesting article in yesterday's WSJ about why Texas is doing better than most states. <a href="http://online.wsj.com/article/SB10001424052970204528204577011652396660864.html" rel='nofollow'>http://online.wsj.com/article/SB10001424052970204528204577011652396660864.html</a>
Not from around here
Sun, Dec 26, 2010 : 6:53 p.m.
unfortunatly for that some of the jobs should have been saved. What companies did with the money was to upgrade technology to eliminate those middle managers and bookeepers. And most of those sales people who retained there jobs had to take huge paycuts or go to part time/comission only positions. I saw my base pay cut by 55% and the elimination of any commision unless I hit my goal-which is set at 150% Over previous years sales. Many of the auto workers that made up the middle class in this area lost there jobs or took radically less pay. The banks rushed to foreclose and recorded record bonus (and record political donations) and the baby boomers living off dividends have reaped huge fincial rewards. None of the free money given to the banks has resulted in lower or elimination of fees or gone to help anyone out but the current political party or its wealth benifactors.
AlphaAlpha
Sun, Dec 26, 2010 : 5:53 p.m.
"I'd love to do the experiment over again." You may well get that chance within just the next few years. Historical analogs suggest we are either about half or about one third through what will likely eventually be called a depression. Extend & pretend has not fixed anything fundamental; the fix will cost a lot.
snapshot
Sun, Dec 26, 2010 : 4:01 p.m.
And all those folks basically gave up very little for the taxpayer generosity, show no gratitude, maintain an attitude of entitlement, are't working any harder, longer, or with more dedication, than the slacker, self serving attitude that helped cause the failure. Go figure.
5c0++ H4d13y
Sun, Dec 26, 2010 : 3:19 p.m.
Of course we all supported the banks bad behavior by using the no money down and interest only loans to spend more on housing. As my kids would say bubble Bubble BUBBLE POP! The auto companies have been getting bailouts and politically directed cash for years. A real bankruptcy where they could cancel their contracts would have been better for company viability. Maybe not so good for michigan. I'd love to do the experiment over again. Let them all fail and go into bankruptcy. The herd gets stronger when the weak and dumb ones are eaten by the wolves.
marzan
Sun, Dec 26, 2010 : 1:28 p.m.
It would have been nice if the banks got the same treatment as the auto companies. The people who should have lost in the auto bailout, lost, as the companies went into bankruptcy. The people who invested in the companies, the bond holders, the stock holders, lost their investments. The people who invested in the banks, who supported the bad behavior, who should have lost money, didn't. The banks were recapitalized at the taxpayers expensive. They've still got all the bad debt on the books.
David Briegel
Sun, Dec 26, 2010 : 12:49 p.m.
Risk Capital? Public Isurance Plan? When did we vote on this? In a just society these same activities, which continue today, would be either criminal or they would have at least been allowed to fail. To bail out the billionaires who are foreclosing and bankrupting the unemployed and underemployed masses is obscene! Had we bailed out the masses, the "free market" would have truly been allowed to work. It would have cost no less! They just don't have "the ear" of our leaders.
John Q
Sun, Dec 26, 2010 : 12:07 p.m.
Mark the day, I'm in agreement with both MS and A2. Where's the accountability for the bank and finance CEOs who almost destroyed the US financial markets?
AlphaAlpha
Sun, Dec 26, 2010 : 11:45 a.m.
Macabre Sunset is correct. Additionally, except for two auto companies, essentially all of the 'bailout' money went to (#1 political donor) banks, where exactly none of the leaders has been shown any door for their stupendous errors. You can take it to the bank that the underlying problems which were hidden by the bailouts are not fixed, and soon enough will return worse than ever. Extend and pretend. We criticized the Japanese for twenty years for that; suddenly our national misleaders are doing exactly the same. Maybe that's OK though. Goldman Sachs et al need the money more than we do...
Macabre Sunset
Sun, Dec 26, 2010 : 11:30 a.m.
The problem is that it was a selective buyout, and it gave companies little to no incentive to hire new workers. That's why in states other than Michigan, we've had what's called a "jobless recovery" from the depression. Nothing has been done for the millions who have lost up to 60% of the value of their homes. But those millions understand, and realize they cannot spend more than what's necessary. However, the unprecedented foreclosure rates will continue to climb, and spending, especially in those areas where home values were hit the hardest, will not recover.