Monday, October 20, 2008
Do you know what I hate? I hate it when I spend more money than I actually have, and then the government doesn’t want to pay me back for it.
I mean, come on people, if I go bankrupt, what would that mean for the economy? It would completely collapse if I couldn’t afford the occasional medium cappuccino and delicious muffin from the Underground. Without that $3, the University might not immediately be able to replace a light bulb in a restroom somewhere in Summerfield.
Truly, it would be chaos.
The spat of corporate bailouts has been driving me crazy. It isn’t just how I feel about them. To tell the truth, I don’t have some all-encompassing opinion of corporate bailouts. Some I accept, and some I want to cringe at.
When news of the federal government’s buyout of Fannie Mae and Freddie Mac broke, I groaned, shrugged and was hopeful that somebody could set them straight.
When the insurance giant AIG was placed in a similar situation, it elicited a somewhat similar response. I added a “This is just getting silly” after the shrug this time.
Then there came the Emergency Economic Stabilization Act of 2008. That was the moment that I changed my reaction, altering it to a pronounced rolling of the eyes, and a “Seriously now!”
I showed off a secret dark side, one born of years living in a red state, with people who think the word “tax” being part of the English language amounts to Communism, as I read about the EESA, or, as I call it, the Give A Man A Fish Act of The Last Year The People Who Sponsored This Hold Elected Office.
The initial proposal ended up failing in the House of Representatives. I was pleased to see that my U.S. Rep. Nancy Boyda voted against it. It only came back to life in both chambers of Congress after a number of earmarks were added to sway a few wayward politicians from both parties. That’s right, the quick fix was passed by mixing it up with another serious fiscal issue the Legislature has been wrangling with.
At what point will there be a real solution to our economic problems in this country? The federal government has a responsibility to deal with problems like the subprime mortgage crisis that got Fannie Mae and Freddie Mac in trouble and other economic issues, but simply throwing money at major firms isn’t going to solve anything in the long run. When will business practices be more regulated to prevent messes like we’re in now? Will it be soon enough to make a noticeable difference?
Call me a glass-is-half-empty type, but it’s going to take something big to convince me.
— — Cohen is a Topeka senior in political science.
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Comments
leehuaitu (anonymous) says...
Perhaps you could use an economics degree?
October 21, 2008 at 1:07 a.m. ( permalink | suggest removal )
ebenavid (anonymous) says...
Rock on Ben Cohen! Let's get together and demand a $400k retreat from the feds, just like the one some high rollers at AIG got off the bailout money! I could sure use a massage right now :)
October 21, 2008 at 1:17 a.m. ( permalink | suggest removal )
connerm (anonymous) says...
Ben,
I am anti-bailout as well but I wouldn't point the finger at "deregulation" of corporations (whatever that means.) Fannie and Freddie made $5 trillion in subprime loans because of a 1995 bill reforming the CRA that required them to make 50% subprime loans. When attempts at oversight of these two institutions was made, the Democrats fought it and stopped it all 3 times. Fannie and Freddie are also not private companies, they are GSEs. Though their employees make a private profit, the risk they take on is shared by the taxpayers. No private company could get to their size or take on their risks.
The loan giants that crashed were beholden and intertwined with Fannie and Freddie, who took such a significant portion of the market share that their actions reverberated across the market.
If Fannie and Freddie had not been forced to take high risk and then supported by the implicit guarantee of a bailout by taxpayer dollars, we may not have ended up in such a mess.
October 21, 2008 at 11:04 a.m. ( permalink | suggest removal )
thatonedude (anonymous) says...
Good job regurgitating Adam Poole's column ;).
October 21, 2008 at 4:34 p.m. ( permalink | suggest removal )
connerm (anonymous) says...
If you're addressing me, thatonedude, you should read the comments I've made in the past. I have been talking about this since well before Adam Poole wrote his (excellent) column.
October 21, 2008 at 6:19 p.m. ( permalink | suggest removal )