Feb 6, 2009

Bailing out on TARP

CNNMoney is running an article today which reports that Goldman Sachs, as well as a few other companies, has decided it wants to give back the billions of dollars it received in government aid under TARP. The decision follows closely on the heels of President Obama's introduction of a policy which would put a cap on executive pay among companies who receive bailout money; a policy which does not, in fact, operate retroactively.

That fact is casting a shadow over Sach's decision. The general sentiment is that this move is an attempt on the part of Sachs (and banks in general), who are already in the doghouse with the american taxpayer in a big way, to distance themselves from the possibility of being caught up in any further government regulations. At the same time, some analysts are voicing doubt as to whether Goldman Sachs can even continue to fund their business without government aid.
Should struggling private companies be given the choice between aid and bankruptcy? My knee-jerk reaction is to say of course they can, provided they're actually able to pay back the full amount they were given. In such an instance, isn't the company that makes the decision the only one to face the negative consequences of such a decision? It really isn't as simple as that.
Banks, who are major agents of the flow of currency through our nation, are intricately tied to the health of our economy. It seems obvious to me that the sudden collapse of multiple banks would be disastrous not only for the economy, but more importantly for the general population of the nation. But this dependence is largely a manufactured thing; indeed our dependence upon currency as we understand it is itself an entirely manufactured thing. When private companies become so inextricably interwoven with the existence of a manufactured product which has become essential to the continuation of our economy, a product which at the same time depends entirely upon the system which those private companies perpetuate, a system which is itself a large portion of the structure which holds up our nation, the individuals who make up those companies cease to be entirely private citizens. They become caretakers of the economic system which they are helping to manipulate and (hopefully) stimulate to the benefit of the entire nation and ALL the individuals that make up that nation. It seems to me that this concept is the very thing that has been forgotten.
In the face of all this, President Obama's approach seems to be aimed at temporarily bolstering a sinking ship in an attempt to provide enough time for meaningful, long term retrofitting. The unprecedented size of the buoys the president has proposed is a good indication of just how serious the problem is, and just how serious he is about how long it could take to fix the problem. His reaction to the actions of companies caught up in the need for aide, particularly the banks that are largely blamed for the bulk of our nations financial woes, is an encouraging indication that our president has NOT forgotten that our national financial system is inextricably beholden to the people who prop it up: John and Jane Doe.
So should the banks be allowed to implode? Probably not, at least not immediately. While it's entirely possible (and indeed seems increasingly likely) that an entirely new economic system must be implemented to safeguard the survival of our nation, the banks and other currency-concerned systems are all we have at the moment, and to let them go would be to let the cohesion of our nation fade, an event that would have disastrous ramifications for the only people whose well-being the nation should be concerned with: The People.

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