January 25, 2009
The Obama administration wants banks to use some TARP (Troubled Asset Relief Program) money to increase consumer and business loans. Or so they say.
“The point is to get credit flowing again to businesses and families across the country — that hasn’t happened with the expenditure of the first $350 billion,” top advisor David Axelrod said in early January.
There’s talk of stricter controls and oversight for TARP II. But exactly how the Obama administration will force banks to start lending more money to consumers and businesses isn’t clear. Does the Obama administration really want to do it? Axelrod’s words may be for public consumption only.
Banks know that with the economy stumbling and more and more businesses going under and people losing their jobs, defaults on mortgages and unpaid auto loans and credit cards increase. Delinquencies rise for all types of consumer credit. With fewer people buying, business lending gets riskier. In such an environment, banks loan less, not more. They hoard cash for an even rainier day.
A better idea is to help consumers pay the debt they already have through mortgage restructuring or mitigation and economic stimulus through job creation. If you lose your job, the best way to keep paying your mortgage, car note and credit card bills is to get another job. At the same time, government can twist lending institutions and investors to renegotiate consumer debt, like threatening them with cram-downs, which already seems to have worked. Use TARP to help banks stay solvent, while economic stimulus creates jobs so people can pay their bills, then debt restructuring makes those bills easier to pay. That will loosen up credit – slowly, but in a sustainable way. Anyway, do we really want to increase consumer and business debt right now?
The public hates all this talk about bank bailouts, of course. But what of it? They should hate it; it’s hateful. I hate the fact that our financial institutions acted so irresponsibly in giving out mortgages and credit cards to anybody with a pulse. But arguing against bank bailouts is foolish. Banks hold all the money. Not just bankers’ money – your money, my money, everybody’s money. And their investors hold everybody’s notes. If they go down, we all get hurt.
In return for bailing out banks, let’s get the biggest equity stake possible. I’m not afraid of the N-word: nationalization. We don’t nationalize like Venezuela does; whatever chunk of the banks that taxpayers buy will be sold back to private investors later on. The key to whether Obama’s bailout of banks is a success is whether the federal government recoups its losses, or turns a profit, a few years from now. If it does, it will all be worth it.
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Barack Obama, TARP, bailout, banks, cram-down, default, economic stimulus | 
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Posted by jgogek
December 10, 2008
What Journalism was meant to be: "News" by Isamu Noguchi, at the old Associated Press building in Rockefeller Center (where I started as a copy boy)
What we need now is a bailout for newspapers. Not a blank check to soften the cushion for the likes of Sam Zell. No, let’s do it just like we’re doing it for the auto industry, and for the same reason. We must help newspaper journalism survive because it is vital to the Republic. But, only those newspaper companies that can develop a workable plan to quickly transport themselves into the digital age should be eligible for this bailout. And, the money should strictly go toward helping newspapers to stop killing trees and start being Internet only.
Newspapers – or at least newspaper reporters and editors – are critical to our society and democracy. If newspapers start collapsing and closing down, we will lose a public service that’s more valuable than many branches of government. There will be almost nobody to keep government and industry honest without newspaper reporters. The pronouncements of special interests will go unchallenged. People will not know what to believe.
Perhaps the greatest danger to a democratic system is the public’s feeling that things are beyond control, that the individual is powerless to affect the march of history. Among the mass media that connect the individual to the world, the newspaper has the unique ability to provoke reflection, to view with alarm what might otherwise be accepted complacently, to create issues for debate and to offer plans for positive action. Thus it offers links between people’s own individual and private interests and those they share with the rest of society.
Leo Bogart in “Press and Public,” 1989
TV and radio reporters only tell you what happened (NPR does a little more but its story count is very limited.) Bloggers (like me) tell you what they think happened, often with no facts to back it up. Newspaper reporters and editors tell you not only exactly what happened but they tell you why it happened. Only in newspapers does the public get enough information to decide the truth for themselves. TV, radio and blogs still get most of their information from newspaper and wire service reporters.
Unfortunately, people who work at newspapers have been deluding themselves over the past ten years that they could somehow survive in the dead tree business. They were living in the past and ignoring reality. But the avalanche of bad news cannot be denied. Many newspapers may have only a few years to live. Some will not survive the recession. We will soon see major cities with no newspaper. That’s far worse than a shame. It’s a threat to society. It’s a threat to democracy.
Newspapers can survive, but only if they race as fast as possible to the paperless future. They won’t do it on their own; they need some enticement or coercion. A bailout of newspapers won’t cost anywhere near what it costs to bail out Detroit or Citibank. And if the government wants some equity stake as collateral, I’m fine with that. It works with NPR and BBC. So let’s get on with it. If newspapers can come up with a plan to go wholly digital, taxpayers who love democracy should help them out. Newspapers have certainly bailed out taxpayers often enough.
… Were it left to me to decide whether we should have government without newspapers, or newspapers without government, I should not hesitate a moment to prefer the latter.
Thomas Jefferson in letter to Colonel Edward Carrington, Jan. 16, 1787
2 Comments | Newspapers, bailout, journalism, media | Permalink
Posted by jgogek
