An old friend, K, posted her opinion of the bailout yesterday on Facebook, including this corrective to those who are themselves
crying for a piece of the action arguing against using taxpayer funds to rescue Wall Street:
The bailout is meant to fix the credit market and stabilize the economy.Very true, and probably the most succinct argument I've read yet for the necessity of the bailout. Then this morning, Charles Krauthammer agrees with K and adds an additional (and vital) warning against the instinct to punish Wall Street's supposed malfeasance:
Individuals aren't the only ones who use credit - companies use it too, and they use it just like we do: to cover expenses until they have the cash to pay them off. These expenses include: money owed to other companies for supplies, copyrights, etc., and of course, payroll.
If companies have their credit lines cut or severely reduced, they won't be able to cover their expenses...and this doesn't apply only to poorly managed companies. A bad credit market affects everyone, including well-run, ethical businesses. There were financially sound Fortune 500 companies that almost didn't make payroll last week for this very reason.
So, what happens if there's no bailout is employees don't get paid, companies go under and countless workers are laid off. This is what the bailout is meant to prevent. It might not give money directly back to the taxpayers but it will help them keep their jobs. Aiding companies that have used poor business practices and people who made bad decisions with their mortgages is an unfortunate side effect, but it's better than the whole economy going in the tank.
Congress has every duty to be careful with taxpayers’ money and to suggest improvements in the administration plan. But part of Congress’ reaction has nothing to do with improving the proposal and everything to do with assuaging the rage of constituents — even if it jeopardizes the package’s chances of success, either by weakening it or by larding it up with useless complicating provisions designed solely to give the appearance of sticking it to the rich [and] window dressing such as capping pay packages, which the Bush administration has already caved in to. I’ve got nothing against withholding golden parachutes from failed executives. But artificially capping the pay of people brought in to lead these wobbly companies back to health is a fine way to tell talented executives to look elsewhere for a job.I like having smart friends.