Auto bailout – Stiglitz weighs in
By Jeremy Hinton | Friday, December 12th, 2008 | PolicyJoseph Stiglitz, former Chief Economist of the World Bank and an economist I greatly respect and usually agree with, published an oped in the Financial Times yesterday arguing for a Chapter 11 filing for US automakers (free registration may be required for viewing). While I agree with the very real need for bankruptcy style restructuring, I continue to be wary of the impact of the stigma and public perception of a bankruptcy filing. He references the use of government guarantees of Chrysler in ’79 as an example of how to perhaps inspire confidence. However, it must be remembered that in ’79 Chrysler did not file for bankruptcy, it just got loan guarantees to avoid bankruptcy.
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7 Responses to "Auto bailout – Stiglitz weighs in"
I agree that a bankruptcy-like restructuring is in order, but without bankruptcy itself. Chapter 11 would quickly lead to a Chapter 7 – and the flushing of the rest of our economy into the toilet.
That said, the GOP’s obsession with breaking the unions – when they completely ignored the high pay, bonuses and benefits (corporate jets) of the financial industry rings a bit hollow.
The World Bank is one of the most corrupt organizations in the world. Forcing countries to take huge loans for infrastructure, giving the money to foreign corporations, and then causing prices for utilities to rise dramatically. The country cannot repay the loan, they are forced to refinance and agree to a “good governance” such as selling their natural resources real cheap to our companies or allowing us to move troops or supplies through their country.
Oh and this whole “Auto Bailout” bullshit is just a scam, the fed already has the power to bail the auto giants out. They are giving out 2 trillion in unidentified loans, so whoever thinks this auto-fraud is anything more than just that, a fraud, is an ignorant fool…
[...] Hinton of Bearing Drift waffles. See here. On the other hand, J.R. Hoeft presents the BIG LABOR contract. See [...]
Max, you’d probably like Stiglitz. He was a prominant internal dissenter during his time at the World Bank, criticizing IMF policies like the overzealous promotion of infrastructure privatization for developing countries, noting the poor results in a lot of the post-Soviet countries. He was eventually fired for being overly critical of the US Treasury and IMF. He went on to found the Initiative for Policy Dialogue, a group for assisting developing countries with devloping solid economic policies more tailored to their situations and politically inclusive than the strict mandates of the IMF.
There’s no lost love between him and Summers, and I would have much preferred to see more of him and less of Summers in Obama’s team.
[...] Hinton of Bearing Drift waffles. See here. On the other hand, J.R. Hoeft presents the BIG LABOR contract. See [...]
Well, except of course that he’s a liberal. Forgot about that part.
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