Back in September, 2008, I suggested that the government should infuse money into the collapsing financial industry by acquiring preferred stock in the troubled companies; stock that would subordinate all existing stock. These shares would be ultra-preferred. Before any profits could ever be distributed to any shareholders, before any bonuses could be given to any executives, this stock would have to be repurchased by the corporation, hopefully at a profit for the taxpayers, but certainly not at a loss.
See, Bailing Out The Bailout That Will Bailout The Economy
This plan would have infused the economy with much needed cash and would have created an incentive for corporations to get back in the saddle and produce. You know, something American. As we know, though, the rich only want government subsidies, welfare if you will, they don't want to ever actually work for their money.
The economically privileged throw around words like "earn" and "work" when referring to the working class, but believe they should be allowed to sit at desks doing very little and earn six-, seven-, even eight-figure salaries. They think that is "earning their money" and "working for a living." Still, the rich don't even want to do that, they just want the government to give them welfare. And they've gotten it, in spades!
Not only is nearly a trillion dollars of tax money being given to the supply-side theorists who are destroying America, the safeguards that you thought were in place to protect them from running off with the money aren't there.
Here's the little detail I didn't know: executive compensation, shareholder distribution, and other embarrassments of the free-market that were supposed to be restricted for companies receiving bailout money are subject to scrutiny only if the government has purchased assets (generally at auction) from the troubled institutions. If no assets are owned by the government, then there is no scrutiny!
So, I thought that any company receiving this welfare would be held accountable for excessive waste, but they are not. Why? Because once they got our tax dollars they didn't have to auction off any of their troubled assets! So, they have gotten around the requirement that executive compensation and shareholder distribution be curtailed while they rebuild in this sluggish economy!
They are just walking away with the money, will continue to give the executives and board members ridiculous compensation, distribute so-called profits to shareholders, and lay-off millions of Americans who will become a further burden on the taxpayers.
You've been had! And it's worse than you think!
I could be wrong. Perhaps some of the billionaires that are receiving welfare are under scrutiny, have auctioned distressed assets to the government, and have curtailed excessive compensation and distributions; but I haven't heard of any. Have you?
1 comment:
In theory I like the idea of having the government acquiring preferred stock in troubled corporations. I don't see why corporations would not like the idea as is but I think they might really go for it if they were permitted to meet their tax obligations by issuing preferred stock to the government in lieu of making payments. When you think about it it would be much more efficient than the whole ritual of transferring funds into government coffers just to have them handed right back to them as a bailout. And the preferred stock would give the government a real means to hold the companies accountable. The fact that preferred shares are non-voting stock should relieve anyone of the fears that the government is taking over in the decision making of corporations.
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