Readers rant on financial crisis
Readers sound off on financial turmoil
Here are a few reader e-mails touching on Treasury bailouts and the Fed.
“How is it that only one, two, three or four megabusinesses (consolidations, etc.) are allowed to take place that, if only one to four fail, the results can affect the entire U.S. economy? This seems extremely ridiculous and dangerous. Example: Now the airlines are consolidating even more (Northwest-Delta talks of consolidating). If we reach a point where there are only one to three airlines, isn’t there a danger that a union strike, management decisions or strategy issues could conceivably pretty much paralyze our entire travel industry in the U.S., etc. These circumstances are disturbing to me and I would think others would be similarly concerned. But I haven’t seen anything in the media that raises concern about the potential (and real) risks that lie with putting all of our eggs in one basket by allowing megabusinesses to develop rather than spreading risks among many smaller private businesses who, if some of them failed, would not have the same devastating “crisis mode” we are currently facing with the financial institutions, banks, insurance firms, brokerages, etc. How can the federal government continue to rescue private businesses that exercise poor judgement, unwisely delve into high-risk practices, get burned, and yet do not need to bear the consequences — which are left to taxpayers and others who use more prudent judgement. The quick answer by others is that “if these firms are allowed to fail, the results would be even more devastating to the economy” just doesn’t seem to make a lot of sense, because they set a precedent for other firms that could carelessly get themselves into similar predicaments with relative impunity. The world is not only “flat,” it is getting turned upside down.”
Your point about companies getting too large and jeopardizing the health of the entire economy and financial system is well taken. As many others have said, it smacks of a lack of regulation and oversight of those that are considered “too big to fail.” However, the word “bailout” is used way too loosely. Example: AIG received a 2-year loan at more than 11 percent interest and secured by the assets of its subsdiaries, while the government took an 80 percent stake in the company, threw out the management, nearly wiped out the common shareholders and has veto power over the company’s financial decisions. Not what I consider a gift.
“Here we go again Greg, the great bailout. You know, it’s sad that the taxpayers of this country will again be saddled with debt they are not responsible for. What sickens me is how Congress, Bernake and Paulson try to justify it by arguing that if they didn’t bailout the finacial market, banks, investment companies, mortgage companies, etc., we would be so much worse off than if they didn’t. So please tell me how in the world we got into this mess in the first place. I put it squarely on the shoulders of Congress, the Fed, the Treasury and the White House for not doing their jobs, along with deregulation. If that is not enough, now we are saddled with an additional $3,625 per person in the U.S.”
And here is a comment regarding the question I asked last week about whether additional interest rate cuts by the Federal Reserve accomplish anything.
“The Fed started this whole mess with Greenspan’s 1 percent money for over a year. Rate cuts just give fuel to the greedy who squander it.
“More rate cuts won’t fix things.
“Put a few of the guilty in jail. No more multi-million dollar bonus for fired and failed CEOs.
“Censure the congressmen who supported Fannie Mae while they burned down the barn.”
My sincere thanks to all those who took the time to write in.