One of the less fortunate results in the wake of the Great Recession was the failure for any business leader to suffer any great sanctions. From the bankers and insurance companies, such as AiG, they got their TARP funds, performed a little reform within, and carried on, unless they were bought out. A glaring exception was Lehman Brothers, which no one bought out and died, as if a single exception.
And Americans were not pleased. This is not how capitalism is supposed to function, in the minds of most folks. The strong survive and the weak and foolish go under.
So I’m very interested to find out in the coming days, months, and years how the apparent rescue of Boeing, victim of its own foolishness in the case of the 737 Max tragedies, and then joining in the general corporate suffering brought on by the COVID-19 outbreak. Here’s WaPo:
The carve-out is separate from the $58 billion the Senate package is providing in loans for cargo and passenger airlines, as well as the $425 billion in loans it is allocating to help firms, states and cities hurt by the current downturn. Congressional aides cautioned that the Senate bill was still going through last-minute revisions and could change.
I was particularly appalled at this:
In a Tuesday interview on Fox, Boeing chief executive Dave Calhoun said he would not be willing to give the government an equity stake in the company in exchange for a bailout, implying the company would only accept assistance on its own terms. President Trump has said he would support the idea, suggested by his economic adviser, of taking an equity stake in companies that receive assistance in the package.
“If they force it, we just look at all the other options, and we’ve got plenty of them,” Calhoun said.
I think that’s an elitist attitude, and I note that former UN Ambassador Nikki Haley has resigned from the board for even considering taking this opportunity. But Boeing also has the ear of President Trump:
“Probably I would have considered [Boeing] the greatest company in the world prior to a year ago. Now they get hit 15 different ways,” Trump said in a March 17 news conference, alluding to problems with the now-grounded 737 Max jetliner. “It was coming along well, and then all or a sudden this hits,” Trump said. “So we’ll be helping Boeing.”
And since they don’t mention the loan terms, you can guess they’ll be very favorable.
This is crony capitalism at it’s worst, and should provoke public outrage. However, we’re all distracted by the outbreak, the yelling about the old should sacrifice themselves for the good of the Republican Party, and all that goes along with it, so I suspect Boeing will get the money for far better terms than the TARP recipients.
And will we be outraged by TARP? We were last time, but this time it’s easier to point at COVID-19 as a natural disaster, even if it’s been ill-managed by both the Chinese and the Americans.
