Bailouts Galore

Remember when the bailout was supposed to be transparent?  Yeah, forget that Hank Paulson ever said anything about that…

Michelle Malkin points out that newspapers are also looking for a bailout.  Considering that their business model is almost as good as the US auto industry’s, I guess it makes sense.

States are also looking at a bailout.  California is the first, and others will be in line.  Ohio’s governor, Ted Strickland, is also looking for a federal handout (closer to the $500 million mark than $11 billion).  To which I respond:  tighten your belts.  Thankfully, there are some governors who aren’t begging for a bailout.  Sanford and Perry point out that all of this bailout is already coming in the form of debt on the federal level, meaning that the next institution that Hank Paulson will have to bail out is the federal government itself!

Russ Roberts isn’t quite sure that Ben Bernanke knows what he’s doing, and that the constant change in strategies that they’ve exhibited, far from being a good thing (”Because it shows that they are willing to change their minds when the facts change!”), is hurting markets.  One of the most important aspects of a market is that individuals form expectations.  When the rule-makers are changing the rules on a weekly basis, there is no way to predict several years into the future with any reasonable probability of success.  This prevents market-clearing activity from occurring.  Again, “Bold, Persistent Experimentation” is a bad thing because market volatility is a bad thing and the latter is exactly what the former causes.

GM has upped the ante and wants $18 billion in bailout cash for its own, including $4 billion in December and $4 billion in January.  Since GM has no long-term prospects of success at its current rate, that’s pushed the $25 billion up to $50 billion a year for one company.  Let the losers there go bankrupt, re-negotiate their horrible deals, and have new managers take over various parts of GM, dispersing and combining as it makes sense to do.  Oh, and Ford wants a $9 billion “stand-by” line of credit that it “probably won’t use.” Sadly, the White House won’t put up the “no panhandling” sign.

Meanwhile, over in Europe, the EU governments are proving that their rules mean absolutely nothing.  It’s illegal to give subsidies to industries in the EU, but meanwhile, they have already set up a second set of rules which—due to strict environmentalist controls—can make their auto industries uncompetitive and, ironically enough, shift them over to the US even faster than has already been occurring.

With Latvia also in a recession, its government has decided that the best way to fix that is to arrest and detain economists who speak the truth.  Note to Latvia’s government:  you guys aren’t the Soviet Union, and that stuff doesn’t work.

If Megan McArdle’s experience with Sears support is typical, it’s no wonder they posted a 3Q loss and you can see them lining up in the bailout line sometime soon.