| Citigroup is in trouble and Washington might step in and give them more financial aid from the bailout funds. They already received $25 billion in October.
Why are we helping them and not GM? Robert Reich (Secretary of Labor under Clinton) has the answer - kind of.
So why save Citi and not GM? It's not at all clear. In fact, there may be more reason to do the reverse. GM has a far greater impact on jobs and communities. Add parts suppliers and their employees, and the number of middle-class and blue-collar jobs dependent on GM is many multiples that of Citi. And the potential social costs of GM's demise, or even major shrinkage, is much larger than Citi's -- including everything from unemployment insurance to lost tax revenues to families suddenly without health insurance to entire communities whose infrastructure and housing may become nearly worthless. I'm not arguing that GM should be bailed out; as I've noted elsewhere, GM's creditors, shareholders, executives, and workers should have to make substantial sacrifices before taxpayers should be expected to sacrifice as well.
Nonetheless, Citi is about to be bailed out while GM is allowed to languish.
It all boils down to perception. Reich says the Treasury and the Fed believe their job is to keep "the financial economy "sound", by which they mean keeping Wall Street's own investors and creditors reasonably happy."
What about GM?
GM is simply a big, clunky old manufacturing company... GM is just ... jobs and communities.
And people with families and mortgages and medical bills, but we must keep investors and creditors happy at all costs. Jobs be damned.
(Cross-posted at Stone Soup Musings.) |
