That’s what I’m left wondering when I read stories like this one,entitled “Bailout scope limited to … virtually anything.” Here’s an excerpt …
“As the list of ailing companies seeking government help grows, it is anybody’s guess where the Treasury Department’slargesse will stop.
“The $700 billion bailout bill is so vague that virtually any U.S. company could be eligible for government help.
“While the capital infusions announced this month will be directed only to banks, Treasury spokeswoman BrooklyMcLaughlin confirmed the law allows the department to create other rescue programs “open to a broader set of financialinstitutions.”
“As the bill is written, “financial institutions” don’t have to be banks or financial entities. In theory, any companycould declare itself a financial institution and ask Treasury to grant it temporary aid if its rescue is deemed”necessary to promote financial market stability.”
Critics said Congress should have set a clearer definition for the kinds of companies that could be rescued.
“Talk about the barn doors being left open — it’s like they left off the walls and roof, too,” said Bert Ely, anindependent banking consultant. He suggested that under the bill, an airline could transfer future revenue streams intoa subsidiary and ask the government to buy shares in that new “financial institution.”
“The only limit to what Treasury could do, Ely said, is the bill’s $700 billion ceiling.
“Representatives of the auto, insurance and other industries are already seeking government help, indicating they thinkthey qualify because of their financing units. But McLaughlin’s statement suggests that even companies withoutfinancing operations could qualify as well.
“No company outside of banking, insurance or auto manufacturing has yet said it will ask for aid from the bailout. Butairlines and home builders are lobbying for government help to prop them up through the economic downturn — eitherunder the bailout bill or some other legislation.
“And if insurance and auto lobbyists succeed in their efforts to tap the bailout money, experts said other industrieswould probably follow.”
Frankly, this is getting patently ridiculous, as I warned that it might. The resources of this country are notunlimited. Capitalism only works when you allow failures to occur. Flushing hundreds of billions of dollars down thetoilet to support every Johnny Come Lately bank, insurer, investment bank, auto maker, home builder, investor, andforeign country that made bad decisions just doesn’t make sense.
I’m not even talking about the outrageous fact that ourtaxpayer money is going in the front doors at the nation’s banks, then right out the back to shareholders as dividends.Or that our taxpayerdollars are supporting Wall Street firms that are simultaneously poised to pay out billions and billions of dollarsin bonuses. I’m talking about the extremely troubling notion that core economic principles in this country are beingthrown out the window.
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Love your work Mike. But, as someone who is pretty good at reading charts, please look at your hourly intraday charts before posting: “Watch out! Crash gaining momentum!” We are in a counter-trend bear market rally in the
short-term up to 20/50 EMA/SMA on the daily charts. Probably a bull trap at some point once most companies reduce their earnings estimates going forward. Watch MACD monthly charts going forward.