Monday, February 02, 2009

Banana Capitalism?


http://finance.yahoo.com/tech-ticker/article/166389/Hybrid-or-Hydra-Meet-the-New-Bailout-Same-as-the-Old-Bailout

Blodget and Task are right. The irresponsible banks can be restructured or liquidated in an orderly manner without mugging the taxpayers. Shockingly enough, this would require the debt and equity holders to actually accept the consequences of the choices they made. But pretty much all of the talk so far regarding bailout part deux, like TARP, involves taxpayers taking risks and/or losses so that the banks, their equity holders, and their debt holders can escape those consequences or possibly even make money (e.g., bonuses given out by banks currently at the public trough). The gains are privatized while the losses are socialized. What is the economic equivalent of a banana republic?

(end of post; ignore continue reading statement below)

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