First came the bailout. Now comes talk of a bailout from the bailout.
Here is the article. Felix Salmon offers related commentary. This reminds me of problems in public utility theory. To get optimal cooperation, the regulator allows the regulated firm to set price above marginal cost so that the regulated firm has some incentive to obey. But what do you do when the regulated firm is essentially wiped out?
Anything ex-AIG terror Hank Greenberg wants should be immediately suspect. There’s a reason Spitzer went after him like a pit bull and it’s not just because Spitzer’s a pit bull.Think Greenberg, think Cthulu.
Here is another one to ponder over: “A healthy automobile manufacturing sector is essential to the restoration of financial market stability…”
I like thinking about Cthulu.
As for bailouts, we try to warn them and even we are surprised the extent to which moral hazard happens. It’s not even about the “next” bailout. Moral hazard is happening now. Banker bonuses, government financed takeovers making the too-big-to-fail bigger. I don’t think Wells Fargo really needs the money, even though they are pretending to now. But who would turn down free money? I secretly wonder if their recent stock offering was a way to reduce the price of their Wachovia takeover.
Guess what I’m eyeing up for my next set of wheels.
A 2009 Chevy Malibu for $500?
Even Dr. Evil only asked for $100 billion.
http://www.youtube.com/watch?v=jTmXHvGZiSY
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