When will we let the market correct it's self...
The Great Bond Bailout
You're ticked off about the bank bailouts. Furious. You think somebody — other than you and your fellow taxpayers — needs to pay. Let's try to work out who that somebody ought to be. The banks' shareholders don't make a promising target.The stock prices of Citigroup and Bank of America, to name two especially dramatic examples, are down more than 90% from their 2007 peaks. There are arguments, relating to incentives for executives and future shareholders, for wiping out current shareholders at the most troubled banks. But that won't pay for anything — the shareholders simply don't have much more value to cough up. Same goes for those who work in the business. Many have lost their job and life savings, and most have seen their salary cut. Yes, there have been egregious bonuses and golden parachutes — and we ought to claw them back — but that won't pay for a trillion-dollar (or more) bailout. Which leaves ... the folks who loaned the banks money. The banks' creditors have been the clearest beneficiaries of the bailouts — leaving them with the most wherewithal to contribute. (See 25 people to blame for the financial crisis.) more...
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