The Dixon millions double up

[mainly tailfirst]

If a company reaches the point of failure it is essential that those who stood to gain in its success, lose out in the aftermath of the failure. My observation of banks in the US is that the course of actions usually involves a forced sale of the business of the bank to another bank for a "negotiated" price, which means:

1) wipe out the shareholders
2) get rid of the board/management
3) distribute the losses

What I think the architects of the US bailout tried to do was to avoid the above, by buying out the problem childs.

Moral Hazard at work.
As was pointed out to me by a colleague, what has been done is not socialist, it's borderlne fascist. After all, Lehman basically took it in the neck, but when it came to AIG and then (perhaps) Goldman Sachs, suddenly some were "too big to fail". It's this kind of favoritism that has ticked off most of the Republican leaning folks that I know.

Aside: The best conspiracy theory I have heard to date - this is the LOTFAP, there is always a few - is that Paulson actually wanted "to do the right thing (TM)" nearly a year ago and (hopefully) head off the crisis. But he was prevented by the 'Bushies' and some connected Bankers. The former hoped to avoid having to deal with the crisis and leave to the next admin, the latter wanted to squeeze another year of bonuses out.
On the wacky-meter, I give this one a 6.

mt