Bailout Fever

There is an epidemic spreading throughout the land, it began in the United States of America then spread to Europe and eventually throughout the world affecting even small countries like Jamaica. “What is the name of this malady?” you ask, I shall call it Bailout Fever.

It is hard to believe that six months ago no one had even heard of this condition but then something dramatic happened.  Bear Sterns one of the largest investment houses in the USA was about to close its doors and go into bankruptcy.  In stepped the federal government and provided the means for the company to be purchased by JP Morgan at a significant discount.  It was not evident at the time that this was going to lead to the worse pandemic that the world had ever seen.

As panic set into the market and with house prices falling and mortgagees defaulting on their obligations, the Government stepped in again and provided a ‘bailout’ for the two largest mortgage lenders Fannie Mae and Freddie Mac. Then Washington Mutual failed and Wachovia was sold for a bargain and the government went into overdrive.  Congress and the senates had emergency meetings and approved what is now known as the 700 billion dollar bailout plan for financial institutions with no conditions attached.  Not content to stay in one place, the virus jumped overseas to Europe carried perhaps on the wings of the great “Iron Birds”.

Suddenly banks in Scotland, England, Germany, Netherlands and other countries had caught the fever and now required a bailout.  Perhaps the most virulent stream of the disease was found in Iceland where most of the largest banks required a bailout that in total would have been more than 5 times the total GDP of the country which would have effectively bankrupted the country.  Australia, Africa and Asia were affected, nowhere was safe.

The governments of the world thought that they had wiped out this sickness with the bailouts but like the AIDS virus it mutated into several different deadly strains.  Suddenly the automakers were affected with the big 3 in USA asking for a bailout, then VW in Germany and pretty soon all automakers were affected.  Even the great Toyota from Japan announced that it was going to post the first loss in its 71 year history.  And now the latest is the Porn industry making a bid.  What next?

To be fair at least in the US the bailout had conditions of efficiency attached. It was several of these strains that affected Jamaica resulting in bailouts for the tourist, the manufacturing and the agricultural sectors.

It seems most ironic to me that the only one who has not received a bailout is the Tax Payer who instead is the one that has to foot the cost of the ‘Bailouts’ in the first place.

Feedback Question: Should The Government give bailouts with no conditions attached or should companies be required to become efficient to benefit from the concessions?

Tags: budget, dollar, economic, economy, exchange, foreign, jamaica, minister, ministry, recession, tourists, U.S.