A 'throwaway' item in the local newspaper caught my eye this morning. Merriam-Webster, the company that publishes dictionaries, selected "bailout" as its 2008 Word of the Year. That probably was a good choice.
According to the company, the word was selected because of the number of times it was looked up in the company's online dictionary. The company's website gives a five-word definition-"a rescue from financial distress." Merriam-Webster boiled it down to just 28 letters. For businesses, consumers, taxpayers, legislators and others, there are far more than 28 different meanings to the word.
Of course, each of those groups has different expectations of what is a good bailout and even if there is any such thing as a good bailout.
It wasn't called a bailout, but the stimulus package from the spring was designed to bail out the economy before it hit the skids. Those checks were nice, but it seems like a long time ago. The money may have slowed the economy's decline, but they sure didn't stop it.
Investment houses began failing in late summer. Some of them got a bailout, others didn't.
The stock market tanked and is having some trouble getting traction for a recovery.
Then it was the banks.
The money was supposed to put liquidity into the system and encourage banks to make more loans. That, in turn, was supposed to get the economy humming again. At least some banks, it seems, stashed the money to prop up basic capital and still didn't lend much money.
Of course, some banks just declined the money in the first place. One banker even suggested that taking a bailout would signal customers that the bank needed bailing out. It is far too early to see if that one will take hold or is just propping up a bunch of bankers who made bad loans years ago.
All of those bailouts came with a certain amount of controversy, but not enough to derail the whole deal.
The next one just might come off the rails, and that would be fine with many people.
The U.S. auto companies-Ford, General Motors and Chrysler-want $25 billion to get them through the rough stretch. They likely would get it except for one thing. The companies are losing money and market share and presented no real plan to stop those loses. (In fact, in a real bit of 'anti-marketing', the 3 company CEO's flew to Washington to testify on their problems....in their 3 different private jets!) Congressional leaders wondered aloud if they wouldn't just be delaying failure for one or more of these companies. Meanwhile, the overseas companies with plants here largely stayed out of the fray. (It was correctly pointed out that most, if not all, these companies got huge incentives to locate here in the first place.) That is not a bailout, but it is in the same ballpark.
The companies also know that many of their customers depend, directly or indirectly, on the Big Three for income to buy vehicles.
On the other side, taxpayers rightly wonder why they should bail out companies that faltered as a result of so many bad decisions.
Maybe taxpayers shouldn't bail them out, but if they fail everybody suffers.
The politician or economist or CEO who can solve this one will truly have earned his or her pay.
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