My questions still remain: How do you proposed that we fill the Bank Hole? And if you want to do it by punishing the creditors, are you willing to take the risk that it restarts the global crisis in a much scarier way?
I don't think anybody disagrees with Greider's account of why these banks were bad, or of what should be done in the future to regulate them. But the question is what do we do NOW about the Bank Hole? That is the only question on the Obama's administration's mind, and while their critics have a lot to say about Obama's plan, they don't have much of an alternative beyond attention-grabbing phrases like "euthanize the banks" that don't actually mean anything when you think about it. You are right about the unfairness of it, that the big boys shouldn't get special treatment. Exactly, they shouldn't.
But is it somehow more moral to punish the Big Boys if that punishment causes another crashing of the global economy that hurts millions of innocent people? Picture yourself as president, and try to make that decision.
Again, we should be setting up regulations that prevent this from ever happening again. That is the punishment that is needed, although it is not nearly as immediately satisfying for the immense harm the financial industry has done.
We are between a rock and a hard place, and, morally, our choices are between bad and worse.
We don't fill the hole. Trying to fill it with the bailout, using borrowed money and creating more debt, is like digging another hole and using that dirt to fill in the first hole.
ReplyDeleteYou just have to accept that the hole is there. The question is, whose hole is it: the taxpayers or the (mostly) rich investors, shareholders, bondholders?
Like with GM, someone's going to take a hit. Is it going to be the taxpayer, or the shareholders, bondholders, and employees of GM? Why does Obama go one way with GM and another way with the big banks?