Newswise — "Capitalism without the threat of bankruptcy is like Christianity without the threat of hell," famously said Princeton economics professor Alan Meltzer. "It doesn't work very well."
And yet, since last fall's collapse of several major financial institutions—A.I.G., Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, Wachovia, and Washington Mutual—American taxpayers have been treated to bailout after bailout, totaling trillions of dollars. $700 billion for the Troubled Asset Relief Program (TARP); $787 billion for the American Recovery and Reinvestment Act; $90 billion to AIG; $6 billion: as the recession deepens and the dizzying strings of zeroes keep piling on, average citizens have been left scratching their heads wondering, since when in America are gains privatized and losses socialized? Have bailouts become the expected norm? Can bailouts ever be considered a success?
"The Chrysler bailout of 1980 offers a good example of the danger of government bailouts," explains Barry Ritholtz, author of the new book, Bailout Nation: How Greed And Easy Money Corrupted Wall Street And Shook The World Economy. "In that year the Big Three automakers had a 75% market share in the United States and the United Auto Workers had a million-and-a-half members. Now here we are in 2009, Chrysler and GM are bankrupt, in May 2008 the Big Three automakers' share in the U.S. fell to under 50% for the first time in history, and the UAW is down to three hundred thousand members and going lower. So, if losing a third of your market share and having the union lose 80% of its members makes for a successful bailout, I hate to see what an unsuccessful bailout looks like."
Mr. Ritholtz, who also founded the popular financial blog, "The Big Picture," names names and takes no prisoners in Bailout Nation, a bracing and blistering diagnostic of how American has become a dangerous "adhocracy," where economic policy is improvised as we go along, and billion dollar Band Aids are placed over on one systemic woe after another.
"Having Chrysler sold to Mercedes and eventually paying back its loan in 1980, could, on some level, be considered successful," says Mr. Ritholtz. "But if you look at the bigger picture, had the government put these companies in bankruptcy back in 1980, we wouldn't be going through this process again. All these bailouts do is just kick the can further down the road."
For those covering financial news, Fusion IQ CEO, "The Big Picture" founder, and Bailout Nation author Barry Ritholtz is available to discuss a host of topics including:
"¢ Was the collapse of the financial system a "perfect storm," that is, a series of unforeseeable, random events that were not preventable?
"¢ You estimate the U.S. government is on the book for $15 trillion. How did you come up with that figure?
"¢ Is the government, or private industry, responsible for most of the damage? Republicans or Democrats? Main Street or Wall Street?
"¢ Is there ever such a thing as a good bailout? How would you compare the recent auto industry bailout with the Chrysler bailout of 1980?
"¢ How is the bailout situation we're experiencing today similar to the S&L crisis of the 1980s? How is it dissimilar?
"¢ What do you think is the threshold for a bank of financial institution being "too big to fail?" What safeguards should be in place to prevent that kind of systemic risk in the future?
"¢ What can taxpayers do to recover money from the CEOs and employees of the biggest investment banks, mortgage firms and commercial banks that collapsed?
"¢ We're hearing about more and more "green shoots" in the economy. What have you seen recently that strikes you as particularly hopeful?
"¢ What is the most surprising thing you learned while researching this book?
"¢ You make the case that being bailed out has become an expectation—and one that is harmful to the U.S. in the long term. How can this dynamic be changed?
Expert Biography " Barry L. Ritholtz, author, Bailout Nation, founder of "The Big Picture," and CEO and Director of Equity Research at Fusion IQ
A frequent commentator on business television, Barry L. Ritholtz is a regular guest on CNBC, Bloomberg, Fox, PBS, and CNN. He has appeared on a myriad shows, including Fast Money, Kudlow & Company and Power Lunch. He has guest-hosted Squawk Box on numerous occasions, and also appears regularly on other shows. Mr. Ritholtz was profiled in the Wall Street Journal's Quite Contrary column. And interviewed in Barron's "A Leading Bear Turns Bullish, Sort of." His market perspectives are quoted regularly in the Wall Street Journal, Barron's, Forbes, Fortune, and other print media.
Mr. Ritholtz is the author of the new book Bailout Nation (Wiley & Co.). The book has been called, "a valuable new contribution to our understanding of how we arrived at this sorry juncture" by Bloomberg, and a "wonderfully engaging book" by Crossing Wall Street.
In his day job, Mr. Ritholtz is CEO and Director of Equity Research at Fusion IQ, an online quantitative research firm. Fusion makes its comprehensive number crunching available to institutions, traders and individual investors alike. This marks the first time an institutional grade quant research product is available to the public at an affordable price.
Beyond his weekly commentary and published articles, Mr. Ritholtz also authors "The Big Picture," a leading financial weblog that reaches millions of unique visitiors and covers a range of topics, from investing and trading to macro economics and everything else in between. Mr. Ritholtz is also the author of the popular "Apprenticed Investor" columns at TheStreet.com, a series geared towards educating novice and intermediate investors.