Free Lunch On Wall Street

The New Republic

You have read:

0 / 8

free articles in the past 30 days.

Already a subscriber?

Log in here

sign up for unlimited access for just $34.97Sign me up

THE PLANK NOVEMBER 24, 2008

Free Lunch On Wall Street

Judging by the market’s upswing today, Wall Street loves the Citi bailout. But pretty much everyone else hates it--Mark Thoma at Economist’s View has a handy collection of reactions from around the econo-sphere. Setting aside the problems with the deal itself--an 8 percent dividend is nice, but Warren Buffett got 10 percent from Goldman Sachs; plus, it requires almost no structural or leadership changes at the bank and addresses a mere 10 percent of its assets--is that it highlights how poorly Washington has dealt with the underlying causes of the crisis. Admittedly, the collapse in the housing market and the disappearance of credit are now only part of the overall cluster of problems, but they are still the roots of the crisis. But Washington’s approach thus far has been to prop up the banks and assume that they will know how to fix the problem, and that they'll want to. Of course, they haven’t; rather than loosening credit or resolving troubled assets, they’ve gone on spending sprees, burning through the cash without any clear sense of how to right themselves. The really galling thing about the Citi deal is that the industry’s recalcitrance is now readily apparent--and yet the government negotiators continue to give it the benefit of the doubt. As someone with accounts at Citibank, I am personally happy to see it get bailed out. But as a taxpayer and a citizen, I am furious at the government’s willingness to spend enormous amounts of money without any apparent strategy. And while the markets seem happy today, if past is prologue, the next few days will show investors coming to the same conclusion, just as they did after September and October’s free-lunch bailouts.--Clay Risen

share this article on facebook or twitter

posted in: the plank, business, dividend

print this article

SHARE YOUR THOUGHTS

Show all 12 comments

You must be a subscriber to post comments. Subscribe today.

Back to Top

SHARE HIGHLIGHT

0 CHARACTERS SELECTED

TWEET THIS

POST TO TUMBLR

SHARE ON FACEBOOK