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The UK Bails Out Banks the Right Way
The British government announced this morning that it is bailing out its banks by directly injecting capital through the purchase of preferred shares. It announced that the banks will suspend dividends and that top executives will get pay cuts.
This is what many economists advocated be done in the United States, but apparently the Bush administration never considered this route. We'll see which bailout works better.
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Hear, hear.
October 8, 2008 7:03 AM | Reply | Permalink
. . . apparently the Bush administration never considered this route.
I guess the "Bush administration" must have put some heavy mojo on Dodd and Frank. Turned them into zombies -- and all this time they looked and talked like free men able to think and act for themselves -- maybe even legislate on their own.
Fool me once . . . .
October 8, 2008 7:43 AM | Reply | Permalink
Both will work. It depends on the objective. If the objective is a massive transfer of wealth then the Bush plan will work extremely well. If it is to shore up the economy then the UK plan will work. It all depends on the objective.
October 8, 2008 12:22 PM | Reply | Permalink
I could not have said better myself.
October 8, 2008 1:10 PM | Reply | Permalink
No one would have expected you to -- say it better, that is.
October 8, 2008 4:32 PM | Reply | Permalink
Worth also noting that the US plan is a fart in a hurricane compared to the UK one. The US economy is six times the size of the British one. The British bailout is 50 percent bigger than the US bailout -- an even $1 trillion.
October 8, 2008 1:10 PM | Reply | Permalink