Tuesday, 16 December 2008

Bailout Answer

Adam, in his response to my response...

It [the bailout] doesn't guarantee it, but it buys us enough time to ride out the current financial meltdown, such that the Big Three can enter Chapter 11 and restructure. It should also provide enough time that those who see the looming restructuring can transition out slowly into other employment (rather than dumping half a million people into the labour market).

That former is the essential problem. No loans are available except from governments, as the banks are also trying to scale back; so, if governments refuse, then Chapter 7 (liquidation) is the only option. So, I do think it's plausible that total collapse will follow a failure of bailout.

I can kind of see that, but that doesn't seem to be the stated goal. The bailout is supposed to avoid even Chapter 11. What actually happens and what is intended may indeed by two different things, and the ends may justify the means in hind-sight when this is all done.

I still think the bailout is a bad idea.

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