Diary

Are Bailed Out Companies Turning Into Spoiled Children

This morning there is an interesting story about the latest round of bail out begging from AIG.  ABC News obtained a copy of a draft presentation for the Treasury Department about their need for more bail out money.  The original story can be found here at the ABC News page.  I have also downloaded a copy of the presentation to try to avoid the link going dead.

 

The current approach of bailing out failing businesses is similar to a parent repeatedly bailing out a spoiled child.  Many of these companies made bad choices like a spoiled teen that always gets what they want in the end.  The Government has given them money to bail them out, but the businesses have not changed what they are doing.  They keep making the same bad choices in the same wrong business model that just failed.  Is it any surprise that they keep coming back to ask for more money?  The purpose of the bail outs should be to protect the American people from the damaging effects of their mistakes, not protect the bad businesses themselves.  This AIG document just reinforces the extent of how out of control this has become.  Their proposal is nothing but a threat about what horrible things will happen to the United States and global economies if they do no get more money.  In spoiled child terms it is the “Daddy, if you don’t by me that BMW I am going to skip my cotillion and run off with Spike the, the guy who lives under the I-75 overpass.”  The presentation does not even attempt to show what they will do better with the money, or why the last round was not enough.  Why bother when you know that Daddy Geithner can’t say “No” to his little girl.

 

I do have another small problem.  When I first clicked to download the proposal this morning I was braced for some massive study.  What I got was a 21 page PowerPoint.  Not even a really nice PowerPoint to be honest.  For $30 billion you could at least toss in a few cute graphics, maybe a little animation.  Personally, I think they should use one of those founts that makes it look like a ransom note, because that is obviously how they see it.  I will personally volunteer to make a nice PowerPoint next presentation and do it all for a cool million dollars, a great deal.

 

At some point the government, like a parent, is going to have to put its foot down.  When you coming for money you need to have a plan to avoid needing more, not just an open ended demand.  As long as failing companies are able to bully the administration they are not going to get better.  As long as it is so obvious that this is happening the markets and the economy as a whole will continue to flounder under the direction of weak leadership.

 

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