Sunday, November 9, 2008
Nobel prize winning economist Joseph Stiglitz writes in the Washington Post:
"U.S. taxpayers got a raw deal, compared to the terms won by other governments (such as Great Britain) or by the legendary investor Warren Buffet, who provided capital to the best capitalized investment bank.
Want further proof that Washington got a lousy deal? Look at how the markets reacted. The share prices of the bailed-out banks shot up, showing that investors expected net profits to rise substantially."
Of course, unlike taxpayers in China, where bailout money is being used to pay for" low-rent housing, infrastructure in rural areas, as well as roads, railways and airports . . . tax deductions for purchases of fixed assets such as machinery to stimulate investment [and] allowances for low-income urban households" that will actually stimulate the economy, the trillions spent so far in American bailouts have simply gone to fat-cat Wall Street firms, banks, and their executives and shareholders.
And unlike taxpayers in European countries, who get voting shares in return for their bailouts, the U.S. taxpayers have no say in the management of the companies they are giving their hard-earned money to.
And, as Naomi Klein points out, European bailouts included provisions protecting against excessive dividends and executive bonuses, and requiring loans to homeowners and small businesses:
"Five days before Paulson struck his deal with the banks, British Prime Minister Gordon Brown negotiated a similar bailout — only he extracted meaningful guarantees for taxpayers: voting rights at the banks, seats on their boards, 12 percent in annual dividend payments to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, and a legal requirement that the banks lend money to homeowners and small businesses.
In sharp contrast, this is what U.S. taxpayers received: no controlling interest, no voting rights, no seats on the bank boards and just five percent in dividend payouts to the government, while shareholders continue to collect billions in dividends every quarter. What's more, golden parachutes and bonuses already promised by the banks will still be paid out to executives — all before taxpayers are paid back."
U.S. taxpayers have gotten a raw deal indeed.