Too Big to Bail

A mind cartoon: a morbidly obese man is being escorted from a bank lobby by security guards, screaming, “But you don’t understand! I’m too big to fail!”

It comes to mind as the CEOs of morbidly obese American automobile companies wail to the Congress that what is bad for General Motors (or Ford or Chrysler) is bad for the country. [“Automakers Return to Hill to Seek Federal Aid” — The Washington Post] Who can blame them for asking? They have watched AIG, the insurance company that got caught playing craps with its clients’ money in the casinos of Consolidated Debt Obligations and Credit Default Swaps. Dumb? Absolutely. Corrupt? Pretty much. But they were too big to fail. The wretched excesses of Fannie Mae and Freddie Mac, the government-sanctioned mortgage-guarantee companies, are well documented. Too big to fail, so we taxpayers own them now.

After the car companies who will be next? Someone has pointed out that as many people work in casinos in America today as for car companies, and the casinos have fallen on hard times, too.

The irony of the situation is that while General Motors teeters on the brink of bankruptcy and is closing plants as fast as it can get the lights turned off, companies such as Honda and Toyota are making profits, opening factories in North America, and adding dealers. Are they not big enough to fail?

Moreover, when the Big (or should we say Obese) Three make their predictions about how badly we will miss them, they use numbers (jobs lost, economic losses, tax revenue losses) as if the entire automotive industry was going to disappear, not just three dinosaurs of the automotive industry. They pretend that no one in America is going to buy a car ever again, no General Motors worker will find work in the huge new Toyota plants in Ontario or Mississippi, or the new Honda plant in Indiana. If we let them fail, say the Obese Three, the terrorists will have won.

Simple logic, never mind ethics, and a desire for elementary consistency would require the clarification of these points before a decision is made on shoveling money at the American car companies:

* Is the choice really between letting them fail or giving them money? Or do we give them money and then watch them fail? What, exactly, about the availability of a few billion dollars will make the future different from the past?

* How big is too big to fail? Exactly? And why?

* How many hundreds of billions of dollars can the government give to big businesses before the government runs out of money? We need to know this because (I think we can stipulate) the government is definitely too big to fail. Because when it starts to go down, to whom do we go for a bailout?

* How is it that any talk of an excess-profits tax on Exxon (which now holds a world’s record for the number of times it has broken the world’s record for profits) is seen as un-American, while replacing excess losses at General Motors with tax dollars is seen as patriotic? By the same people!

* How is it that the same people who accept, even advocate, the socialization of big-business losses (while the profits remain in private hands) get hysterical about the proposition that government ought to bear more responsibility for health care and health care insurance?

Here’s a wager for you: I’ll bet the car companies get their money, without any of the above questions having been answered, and that we will then be told that our government owns the car companies. But it is the other way around.

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