Failout Part 3 – The Summary or “Remember the Gift Horse & All That…”
We’ve paid off the mortgages of people who would otherwise have gone into default triggering all sorts of chaos in the financial markets – from institutions performing loan portfolio write-downs to calling in credit default swaps, we’ve avoided that nasty mess and in the end those items are now dropped from financial institution’s balance sheets.
Those who had mortgages paid off are not necessarily off the hook for a financial obligation they chose to make but instead of owing it to a truly faceless institution (and one who’s generally subject to quarterly performance metrics and might not want to renegotiate) they get to pay their Uncle.
If you compare this to the bill signed into law by our “CEO President” the bill really is no solution in the end. Since we decided from the beginning it was in our country’s financial stability’s best-interests to borrow a hell of a lot of money to throw at the problem let’s make sure we’re throwing it in the right direction instead of where we think the problem might lie. Excepting for institutional coercion of the banks I highly doubt you’re going to see willing participants in the TARP (as evidenced by this week’s meeting with banks & heads of Treasury & the Fed).
Which is why I’m coining the term “failout” for the proffered ‘solution’ to our problem as it may very well continue our problems into the foreseeable future.
Ultimately, who would be better off at the end of a bailout? The businesses that got us into this mess or the citizens who elect these officials to office to mind said businesses? And if that doesn’t exemplify where our elected official’s priorities are I’m not sure what else will.