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What would be the natural consequences of making sizable loans or inter-industry trusts available to these industries?
1. they would want more, all the time it ends up being more, been there, done that.
2. they would by nature leave out some, possibly many deserving businesses which would fail.
3. they would be difficult to assess for collateral at real value and cumbersome to manage given the current off-balance sheet entities in place.
4. inter-industry trusts show more promise and in some respects represent facility because of their intimate knowledge of their counterparts. However, the government can’t fund them without sever consequence and abuse of these funds by the industries involved. The industries would have to pool resources and fund them, no wait – they’ve already done that and they’re the ones wanting the bailout from US coffers now.
5. See, the problem with taking assets (as the US government) is that the US government can’t be in the business of owning such assets nor of managing them and still have a free market economy. It fails to protect, enhance, progress nor strengthen capitalism but rather it becomes something else both as a system of government and as an economic model. It won’t do both capitalism and that at the same time.
6. Since there exists an immediate situation of concern and the American people have not agreed to another government and / or economic system – the loans having already been made, not having secured the situation as it stands – I would say that solution of ( the question of loans) doesn’t work.
7. These industries weren’t willing to take the necessary steps knowing them nor to adequately police themselves and their activities having a proclivity to abuses already. How can they be given a loan on bad debt that will simply be converted into another loan of 10x’s that “asset value” as a continuation of the same processes? Isn’t that the problem now as it is?
8. It seems neither grants, loans, bailouts, financial rescue packages or permits to steal are actually having any long-term positive effects given the nearly $1.1 trillion dollars +/- already used this year alone.
9. so – is there any way it could work? the basic problem is one of quality. So long as banking practices are to borrow 10:1 against assets while loaning 1:4 or 1:5 against assets then keeping the difference and not reinvesting into the safety and security of their businesses – how can any amount of money help in this? This manner of “prudence” is not prudent, not financially sound and while profitable, is not a good macro economic model for growth and prosperity. It will always yield the problem we are having now – that is what it does when done this way.
Written by Cricket Diane C “Sparky” Phillips, 092508, USA1