Screw Citigroup, Bail Out GM

Citigroup is about to go under.  General Motors is about to go under.  Citigroup will be bailed out by the federal government with hundreds of billions of taxpayer dollars, while General Motors may not get even their $8.3 billion share of the $25 billion the Big Three are seeking.

Robert Reich has a great post up at TPMCafe explaining why this is.  It's well worth a read, but his central point is very simple and clear:  Wall Street suffers from an especially virulent form of narcissism which is reflected and shared by the people who run both the Federal Reserve and the US Treasury.  Wall Street workers believe that what they do is the most important thing in the world, that without their antics on the floor of the NYSE or their intricate games of finessing stock prices, no one would be able to purchase bread or buy clothes. 

To Wall Street - and those Wall Streeters continually picked to run the Fed and Treasury - those shmucks at GM and Ford and Chrysler, and their dealers, and their suppliers, and auto shops and oil change shops and detailers, just don't do very much, at least not much that's important. 

If we bail out both Citigroup and the Big Three, whatever benefits to the economy will be ascribed entirely to the Citigroup bailout by the egocentric Wall Streeters and our uncritical press.  But if we bail out only Citigroup and subsequently watch millions of Americans lose their jobs, with the economic fallout of people all over the country suddenly finding themselves unable to make those small purchases that are the real engine of every economy, Wall Street - and the Fed and Treasury - will scratch their highly-paid heads and wonder how it could have happened even though their own firms were saved.  They might even go on a trip to a spa to try and figure it out.

The Big Three need to be bailed out.  Congress has set forth some preconditions for any bailout, and that's fine.  But it needs to be done, not only because of the direct help it will give to the Big Three's workforce, but also because of the ripple effects throughout the economy.

Comments

[BruceMcF]

A New Deal with the Big Three, also at various other blogs.

[Bryant Arms]

If we must bail out a business, then we should break it up into little companies. Regardless of what kinds of businesses get bailed out, they should not exist in our economy. Businesses that are too large to fail are too big for free markets.

[Joshua Lacey]

What America needs is to become energy independent.Iran just asked OPEC to reduce production by yet another 1.5 million barrels per day.This past year and the record gas prices played a huge part in our economic meltdown and seriously damaged our society.We keep planning to spend BILLIONS on bailouts and stimulus plans.Bail us out of our dependence on foreign oil. Make electric plug in car technology more affordable. It cost the equivalent of 60 cents a gallon to drive an electric plug in car. The electric could be generated from wind or solar. Get with it! Utilize free sources such as wind and solar. Stop throwing away money on things that don't work. Invest in America and it's energy independence. Create cheap clean energy, create millions of badly needed green collar jobs. Put America back to work. It is a win-win situation. We have to become more poractive citizens, educate ourselves and demand our elected officials move this country forward into the era of energy independence. Jeff Wilson's new book The Manhattan Project of 2009 Energy Independence NOW outlines a plan for America to wean itself off oil. We need a plan and we need it now! www.themanhattanprojectof2009.com

[yoyo]

I'm all for bailout of these banks, but most of them should be destroyed for the most part. They are vampires, sucking bits of value out of other's transactions through leveraged arbitrage. It isn't just about bailouts, its that they activly are theiving a large part of the gdp, AND encouraging bad business decisions by short-term stock price boosts.

[Joel]

Very interesting post. What do you think the implications are of a possible Chinese takeover of GM?

[Another sucker]

Back in the late 90's I lost my job and had a 4,000.00 balance on a citi credit card which I defaulted on. It's been long since paid, but for a year their lawyers made my life hell. So here are representatives go... I defaulted and got screwed, they defaulted and my tax dollars keep them in business.

Wake up people, these are our tax dollars!