Putting It Nicely: British Bailout Better Than U.S.

Yes, we are American.  We spend more hours at work than do workers in most developed countries, and can be fired at will (almost). But our banks bailout plan sucks.  I did not want to use a word as strong as the s-word, but it really does.  The Brits are doing a better job.  Their bailout plan has teeth, while ours does not.  Our plan is a give-away to anyone with more than a 100 million in dirty paper.  Maybe I should print my own.

The British Plan	The U.S. Bailout
$800 Billion	$850 Billion
Injects equity	Injects equity
Limits Executive Compensation.	Buddy of Hank’s? No limits dude !
UK tells banks how much dividend they can pay for all classes of shares.	AIG is still paying a preferred dividend.
Endorsed by me.	This plan sucks. Need I say more ?.

It is still not too late to add “teeth” to the U.S. bailout, but I have no confidence in our bailout plan - and neither does the market - which is why the DJIA fluctuated by over a thousand points on Friday.

Bottom-line: The U.S. bailout is not a plan. It is an ill-conceived attempt to increase liquidity at all costs (most of which will be borne by the taxpayer). The British on the other hand - this time around - have brains.

Comments

[Weston:]

I like how you says its better because the UK takes away more "rights" and isn't even capitalist just more socialist garbage let the government tell me how to run my life

2008 Oct 12 12:21 PM

[john s. gordon:]

certainly runaway executive pay must be limited by law when the company continues to lose money. this problem is due to entrenched boards of directors whose primary function is to play golf with the c.e.o.
> jack

2008 Oct 13 11:55 AM

[mediapro:]

One analysis you failed to mention is that the Brits in effect have nationalized the banks.

It's an interesting solution to choosing the winners instead of rewarding the losers. Whether the Treas. and Fed. pick the least exposed, best capitalized banks and let the rest fail or essentially create the Bank of the United States of America, that $800 Billion leverages to ~$8 Trillion, assuming a conservative 10:1 ratio.

Renegotiating distressed mortgages and recaptilizing the markets through this strategy needs to be explored.

2008 Oct 13 03:52 PM