While Oil Energy Money tries not to spout op-eds too much, reading about Germany guaranteeing all bank deposits this morning was the last straw.
The media (and by extension the public) have been criticising bailouts and write downs for the last eighteen months. When Fannie and Freddie Mac were rescued, everyone complained. Same situation with Northern Rock, a failed bank which was nationalized in Britain. The government is ‘forced to save’ corporations who failed through their own stupid avarice.
But limited liability corporations are structured to operate as citizens. They have names, buy things, have rights and pay taxes. And therein lies the rub.
When a citizen runs out of money, he files for bankruptcy and receives state benefits. Companies have the exact same bankruptcy charter: citizens file Chapter 13, companies most commonly file Chapter 7 or Chapter 11.
No one acts angry at an unemployed person for being unemployed, and rightly so. The reason people pay taxes is for the government to support them in case of emergencies. Why doesn’t the same courtesy extend to companies?
This article has no foundation or intention, but this is a point not often raised in mainstream business press: So the banks went down, that doesn’t make them evil. What’s the point of German companies paying some of the highest corporate taxes in Europe if the government acts so begrudgingly in helping them?
The financial industry has been a revenue generator through taxes and fringe industries, it removes inefficiencies and provides capital for entrepreneurs and good ideas. Everybody loved them when they were providing good services. They would’ve loved to have kept on providing those services but things went wrong (rapid expansion, over leveraging etc.) and they needed to be bailed out. That doesn’t make them evil.
Oil Energy Money is just hoping that the press, both mainstream and financial, would lay off the ‘end of days’ schtick with Lehman Brothers as Beelzebub.
So the banks made mistakes, who amongst us hasn’t?
