According to press reports, the government is preparing to throw more multi billion dollar sandbags to stop the flood from the mortgage crisis. There is a talk of a Resolution Trust II, if not in name, in spirit. For those who may not remember, the government created the Resolution Trust Corp to bail out the faltering Savings & Loans. The S & Ls found themselves drowning in bad debt as a result of careless lending that was nevertheless financially rewarding for the people running the S & Ls – sound familiar? The Resolution Trust Corp took the bad debts off the hands of the S & Ls to relieve the S & Ls of their self inflicted problems. The end result of the process was that many who worked the system grew rich, the persons responsible for the crisis as a whole survived and retained their fortunes. (I understand the pain and agony in this crisis has already begun – the former CFO of Freddie Mac is apparently facing tough times – he has to sell his $5,000,000 vacation home). The problem was then, as it is now and apparently will be forever, that the government bail out does not extend to individuals. So much for the end of welfare – corporate welfare appears to remain strong and firmly entrenched. “We the people” has transformed to “We the politically connected Corporations”. With this safety net for the corporate ranks, do you think that we will see Resolution Trust III – bet on it. The situation was allowed to progress so far that the bailout cannot be avoided.
Corporate Welfare Alive and well – The Government is planning to throw multibillion sandbags to stop the credit crisis flood