financial bailouts
I enjoyed this essay on the many failures of Steve Jobs, by Nick Schultz at NRO. But I think he misses the point with this cautionary tale for Washington:
There’s a moral here for a Washington culture that fears failure too much. In today’s Washington, large banks aren’t permitted to fail; nor are large auto firms. Next up will be too-big-to-fail hospital systems. Steve Jobs is a reminder that failure is a good and necessary thing. And that sometimes the greatest glories are born of catastrophe.
The analogy would have more meaning if thousands of Steve Jobses of varying degrees of quality had been bundled and securitized in the most opaque of ways, given ratings by agencies that were on the take, and funded by enormous amounts of debt backed by minimal capital. We didn't have that and thus we had very little to fear from failure on anyone of the many ideas Steve Jobs launched.
This abstract made me sit up and take notice:
The title of the post is borrowed from this piece in GQ by Matt Latimer, recalling what it was like to be a speechwriter at the White House around the failure of Lehman Brothers. It is quite sensational. Here's a passage that I found interesting:
Finally, the president directed us to try to put elements of his proposal back into the text. He wanted to explain what he was seeking and to defend it. He especially wanted Americans to know that his plan would likely see a return on the taxpayers’ investment. Under his proposal, he said, the federal government would buy troubled mortgages on the cheap and then resell them at a higher price when the market for them stabilized.
“We’re buying low and selling high,” he kept saying.
Here's my column from today's Roll Call about what Lehman et al mean for the federal budget.
Lehman a Year Later: Some Budget Lessons Learned, Others Yet to Sink In
Sept. 15, 2009
It was just about a year ago that I returned from a blissful trip in Yosemite National Park to find that the financial world had completely changed. While my friends and I were primarily focused on breathing and blisters and I was doing everything possible to avoid the news (I even covered my eyes as I walked past the boxes that displayed front pages), Fannie Mae and Freddie Mac were seized, Lehman Brothers failed, and credit markets froze.
My column from today's Roll Call is about the next bailout.
Does the Government Need Financial Bailout Insurance?
July 21, 2009
I have come to the conclusion that the federal government needs to have some type of insurance for financial bailouts.
We now know that a financial meltdown has the potential to be costly and that the effect on the budget will be painful and long-lasting. Waiting until a financial disaster occurs to figure out how to pay for a bailout leaves the government largely unprepared to do so. In addition, if, like now, the meltdown occurs when the deficit and federal borrowing are already high, the situation is even more complicated.
