Wednesday, April 02, 2008

Government Bailout, Taxpayer Burden

Finance is mostly a mystery to me, it's not one of my strong points. I'm always happy when I find an article that clearly explains an issue. David Freddoso has done a really good job explaining what went down on the federal bailout of Bear Stearns. It just makes me sick that when corporations make really bad decisions the taxpayer is suppose to pony up and bail out the company.
The ones being rescued are Bear’s bond-holders. They keep their shirts. The stockholders at least keep their socks. The profits from the good times are retained, and the losses are socialized.

There are many businesses in Fayetteville that have failed and never has the Federal government rode up on a white horse and saved them. Why should large corporations get saved.
The taxpayers’ involuntary generosity also benefits the other large institutional holders of mortgage-backed securities. For these, the bailout holds forth hope that the government will someday be there to save them from the free market as well. But can it save everyone?

Does this mean that companies are going to feel free to make bad and risky decisions because the government is going to bail them out?

No comments: