Few like the idea, and no one likes the scale of the giveaways - still, more or less everyone agrees - it is necessary to get the financial system out of trouble by buying out bad assets, infusing capital, reducing cost of funds, etc etc. Even I, who thinks the banks bought it upon themselves and deserve a whipping, realize that there is no point sitting on the sidelines and applauding a fall - something needs to be done.
The problem is that the something costs a hell of a lot: adding up to trillions of dollars in US alone. And that's not counting the contingent liabilities that the government has taken in its books.
The measures have yet to prove they work - stocks are still falling, as is industrial production and consumer purchase. The only thing up so far is unemployment. Of course, the lack of results so far hasn't stopped other nations from following suit - but that is expected. Anyone who wants to be re-elected will have to show that they are reacting to the crisis.
What is more interesting is that media and (former) free market enthusiasts are broadly supporting the bail-out moves. Sure, "experts" on TV, the same guys who thought derivatives were awesome and high debt the signs of a healthy economy, are now giving speeches on what checks and balances should exist when taxpayers help out the industry. But by and large, all channels, all economists, are supporting the giveaways.
How things change... Do you remember about a year ago, when India's agrarian crisis was in the news? When things were so bad in the sector that forget unemployment and losses and poverty and famine, the situation had reached a stage where farmer suicides had become a norm? And the government announced a loan waiver?
[Here is what I wrote that time.]
Well, that bailout was certainly unwelcome. The experts were aghast - there was no proof it would help in the long run, they said. And this would encourage farmers towards willful default, they warned. Let the market sort out troubles, as it always does, in the long run, went the suggestion.
Suddenly, now that help must reach the white collar worker and the shareholders, the same arguments have been put to rest.
That's right,
Bailout's not a bad word, provided... you're rich.
4 comments:
I know what you mean. I believe the guilty should be punished- The CEOs who were sacked after running companies to the ground retired with severance pay of millions of dollars. I'm not much of a Nehru fan but sometimes i think he got the mixed economy concept right.
The whole agrarian crisis could have been handled much better before the farmer suicides for 1000 rupees was happening. it was not even 10 or 15K - measly 1000 bucks the cost of a life.
Checks and balances are all fine- Obama mentioned it in his inaugural speech. The problem sometimes is the watchdog is in cahoots with the perpetrators- what do you do then? Look at Satyam- like we needed one more thing on our already full plate of crap!
The thing with the banks is that they are such fair weather friends- when you don't need the money they are breaking doors down to give it to you and when you do need it- they are nowhere in the picture. Did u read the whole controversy between Vilasrao DeshMUCK( he was as incompetent as ever) and the one guy who was saying something about farmer suicides- P Sainath.( He used to write a lot of brilliant articles in the HINDU)
http://www.india-seminar.com/2003/521/521%20p.%20sainath.htm
http://vidarbhajanandolansamiti.blogspot.com/2008/09/vidarbha-farmers-crisis-and-psainath.html
I follow Sainath, but had no idea about the controversy... Thx for the fabulous links. Though they make one give up on the world!
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