Via Big Picture, this fascinating graphic, originally published in, of all places, Popular Science, is making the rounds. Check it out (unless you're a member of the Austrian school, in which case you can go directly to jail in the note at the end of this post). Read below the fold...
The proposal is to "stretch" (the NYTimes' word) the bailout funds by converting the existing loans to the biggest banks into common stock. This turns the loans into capital for the banks, thus improving their balance sheets, and good things ensue (or so we are told). Because, uh-oh! the stress test are expected to show that some big banks, including my own personal parasite BoA, are in need of more capital. (I know the feeling!)
So I was planning to write a long, witty song-and-dance about a theme to which I've occasionally alluded lately: the importance of globalization in this bailout crisis. But then I decided I'd spare the words and write it out as a few easy and very approximate steps.
1. American wages rise with unionization. Capital is captive and cannot go on strike, must actually innovate. Read below the fold...
Brad DeLong is one of the few liberal(ish) economists willing to stick his neck out and spend his personal credibility as a blogger and academic economist on the bailout plan. For him, apparently, there are only two options: paying off the bankers works, and we are able to dig ourselves out of a Depression, or the Depression falls into apocalypse. However, apparently he's willing to stake his reputation on the former hypothesis:
Via goddammitkitty, who sometimes used to post around here until real life made her cut back. Language a bit NSFW for workplaces where you are forbidden from using vernacular terms to discuss excrement:
You know, I'm beginning to lose track of how many different ways Versailles is screwing us. The latest is another round of the government conspiring with Wall Street to try to hide the size of the big shitpile by paying more for assets than they are worth.
And if it's not just Detroit then it can't really be the fault of the UAW now can it?
Europe's motor industry is in a panic. In boardrooms across the continent the talk is of the biggest emergency for 60 years -- or at least since the 1973 oil crisis.
As executives ask the European Union for a €40-billion bail-out to match or surpass the $25-billion sought by the American Big Three manufacturers -- General Motors, Ford and Chrysler thousands of staff are being laid off. Sales are collapsing as the recession bites, with vehicles stacking up at ports around the world.
There are lots of reasons, but if we had better social insurance, good enough so that the health and welfare of workers and their families was not threatened by the failure of the automakers, it would be a lot easier to avoid a bailout.
The Washington Post appears to have changed an already published article without noting the change. The original article started out:
President-elect Barack Obama's transition team has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders to help the Bush administration gain access to the second half of the $700 billion financial rescue package, government sources familiar with the matter said.