Save the Banks, Shoot the Bankers
Well after my last couple of articles became so unexpectedly popular, I thought it prudent to put a stop to that immediately, lest expectations of competent mirth-dealing become ingrained around here. Here then is the latest in my series of not-completely-unpopular articles on this little financial pickle we seem to be in. In this one I'll talk about the latest plan unveiled yesterday to sink more government money into the hands of child-predator bankers. By arming yourself with this knowledge, hopefully you'll be able to win some arguments, or better identify which of your elected officials are idiots and which are merely corrupt.
First, why does something need to be done to help those animal-molesting bankers in the first place?
Banks have assets (stuff they own) and liabilities (stuff they owe other people). If their assets are ever worth less than their liabilities, then they're bankrupt and everyone has to clean out their offices by five. Now putting pastry-fucking bankers out of work doesn't sound like such a bad idea these days, but we are talking about some very big banks here, and as I've touched on before
This looks pretty impressive until you notice those are ones, and that's maybe 45 bucks there. You've really made it champ.
So here's the plan the treasury announced yesterday:
The government will provide loans for private investors to buy up the aforementioned horseshit from the banks. This would give these banks enough money so they could go about their business and not collapse like an old woman getting out of the bathtub. After that, if the horseshit goes up in price the government gets back their money and splits the profit with the private investors. If the horseshit goes down in price, the private investor takes a small loss, and the government takes a small to enormous loss, depending on various properties of the horseshit (taste? grittiness?)
There's three problems with this plan. One, this involves buying horseshit from the banks for more than it's probably worth, and keeping each bank's current management intact, despite growing evidence that they're colossal fuckers. Two, it involves the private investors taking a chunk of any potential profit while risking only a tiny portion of their own money--effectively another subsidy for wealthy jerks. And the third problem is that this plan may not be big enough. The private investors, even playing mostly with the government's money, might not be willing to pay enough for this horseshit to keep the banks from going bankrupt. So the banks won't sell, and we'll all sit around picking at each other's asses for a bit longer.
The big upside to nationalization is the government doesn't have to overpay for anything, nor share any potential profits with the private investors. So ultimately, in this scenario, there should be less cost to the taxpayer. The major downside is taking over and running a bank for a few months or years is potentially a huge headache, and the kind of thing governments routinely screw up. Remember that time the government did that thing really well with a minimum of scandal? Yeah.