So much for morals in America. We just sent a message to all of corporate America that you can play dirty and we’ll be there to help you when you fall.
More than this was about what was right or what was best, it was about President Bush being able to leave office without an economic crisis on his hands. This was his way of washing his hands clean of the situation.
History shows that bailouts don’t work. In 1979, Congress passed a $1.2 million bailout for Chrysler. Chrysler then spent the next 3 years bankrupt…only not willing to declare bankruptcy. They negotiated and renegotiated with lenders and investors until the only thing lenders could do was swallow large losses and agree to keep Chrysler afloat.
But lenders don’t take defeat well. They turn to the next guy on the totem pole and take it out on them. Know who that is? It’s the citizens—you and I. We pay taxes. We pay for loans. We suffer higher prices and loan percentage rates because of it.
So go ahead and think this bailout will work. It won’t. Time will tell. As someone recently told me, “This bailout is just a stall. It’s like a kid looking in his backpack when he knows darn well he didn’t do his homework.”
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