Tim Geithner's getting ready to shovel more taxpayer money down the rat hole, this time to GMAC.The problem with Obama's economic team is that I know they're smart enough to see the obvious moral hazard they are creating by always coming to the rescue of busted financials.GMAC, in case you're in understandable denial, has been bailed out twice already.
And now Tim Geithner wants to shovel another $2.8 billion in.
What is the US taxpayer getting in exchange for all these GMAC bailouts?
Preferred stock.
Why are we getting preferred stock, which is neither a claim on the future upside of the company's equity, nor a senior debt security that will be completely repaid in the event that taxpayers finally get mad as hell and won't take it anymore?
Because Tim Geithner is worried that if he makes the folks who voluntarily lent money to GMAC -- the bondholders -- lose so much as a cent, the entire US economy will collapse.
They do it anyway. Obama also has to be smart enough to see the problem it's creating. Obama allows it to be done. There's a major problem here, and while Tim Geithner is certainly making idiotic decisions, he's doing so with the green light of President Obama. If Obama wanted to stop Geithner from shoveling money at failed companies, he would.
He hasn't yet. That's not Geithner's fault, nor is it totally his responsibility at this stage anymore. The difference between an error and a mistake is the refusal to correct it.
He's a classic serial enabler working for a classic serial enabler.
Posts
No comments:
Post a Comment