George Orwell's book "Animal Farm" is a satire of totalitarian governments. Totalitarianism invariably boils down to hypocrisy: someone is in charge and they will do as they please and fairness be damned. Though the animals in the story resolve that all are equal, gradually their seven commandments merge into one: "All animals are created equal, but some animals are more equal than others."
And so to our bailout-happy federal government. Throughout late 2008 and early 2009 the feds handed out hundreds of billions of dollars in bailout money to GM, Chrysler, AIG, and most major banks. Now President Obama wants to impose a tax to recover some of that bailout money. Bully for that, I'm happy to see us get some tax money back. But if we are going to impose a tax to recoup the money, whom should we tax? Why the companies that received bailouts should pay, yes? Yes - but. Turns out the new tax requires the nation's 50 largest banks to pay to help the feds recoup. AIG will need to pay as well. What about GM and Chrysler, you ask? Well, they don't have to pay.
This makes no sense to me. We bailed out the banks. Bailed out AIG. Bailed out GM. Bailed out Chrysler. But the last two don't have to pay. What is different about those two? Banks had mostly performed well up until the crisis, steadily increasing profits and market share. Can't say that about GM or Chrysler, whose market share has been falling for about 40 years. The banks employ millions - far more than the automakers - so that can't be it. Could it be that GM and Chrysler have a heavily unionized labor force, something the banks don't have? Could it be politics? Could it be that some bailouts are more equal than others?
George T. Conboy
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).