More Signs the Bailouts Worked?

The never-ending campaign to promote government bailouts will not talk much about news from Bank of America (BAC).  You heard “we” made money on AIG which isn’t a fact since the government needed to sell its stake at $43 a share but used convoluted stuff to get the media to cheer yet another successful bailout.  Just how should these bailouts be measured? 

 

When businesses fail they should go the way of dinosaurs and if salvageable they should go the bankruptcy route.  There is no way the government should step in to decide the difference and tilt the scales of free market laws.  That being said if a government wants to control industry there is no better time to pounce than a panic. 

 

The Panic of 2008 opened the door for government to make its move.  The banks were saved; Chrysler and GM were saved, although the free markets wouldn’t have allowed either to go the route of dinosaurs.  Then there’s Fannie Mae and Freddie Mac- absolute disasters that one day will be cheered as success after time and market manipulation work their magic.

 

Once again, I ask how bailouts should be measured for success.

 

If we are using taxpayer funds then these bailouts should work for the greater good which ironically is the stated mission of the socialist movement within this administration and the notion of shared prosperity.   I don’t get why as a small businessman I should pay more for society at large yet massive billion dollar uses of our tax dollars should only make rich executives riches, give government more power over key industries (the administration refuses to sell its GM stake because GM may focus on making great cars and money rather than using needed capacity to produce cars nobody wants) and tumble into the pockets of political donors.

 

Bank of America is cutting 16,000 more employees this year by reducing branches and mortgage operations.  The move will save the company $8.0 billion by 2015 and leave it with smallest head count since 2008.  Tell the tens of thousands of former Bank of America employees the bailout worked.  Tell the hundreds of thousand small businesses and would-be homebuyers now with fewer options the bailout worked.   Even before this news Bank of America has seen a dramatic decrease in credit extended in this nation.  Last year the bailed out bank cut credit extend in America by $200.0 billion dollars from 2009. 

 

Now, I can see why we should cheer these bailouts.

 

Between TARP, a secret $13.0 trillion lending program and funky accounting banks were able to payback taxpayer loans with interest.

 

The media has cheered, the White House has cheered while Main Street has fewer workers and fewer chances to cheer or reach their own goals.  The bailouts are a complete flop. 

 

I’d like to hear your thoughts, reach me at Charles.payne@wstreet.com.