Monday, June 15, 2009

The Long Arm of the Government Crisis "Bailout"

WSJ does a great job of reporting just how far government money is distorting the economic landscape:
The massive intervention has shifted the way companies do business in a host of ways -- not all of them intended by the government. Increasingly, companies big and small are competing on the basis of their ability to tap government money. A divide is opening between gets and get-nots...

Factory worker Dennis Davis recently stopped at the Cabela's store here to buy a $90 carrying case for the long-barreled Contender pistol he uses to shoot pesky groundhogs at his brother's farm. He paid with a store-issued credit card.

The U.S. government helped finance the transaction. Earlier this year, it recharged the credit-card operations of the Nebraska-based retailer of hunting and camping gear with nearly $400 million of federal financing...

The prospect of dipping into buckets of federal money has ignited competitive scrambles in lots of industries. In the farm-equipment sector, Deere & Co.'s purchase of a thrift years ago qualified it in December for a government guarantee on $2 billion of its debt, through a Federal Deposit Insurance Corp. program to help banks access debt markets.

But the FDIC didn't cover competitors such as Caterpillar Inc. or smaller equipment providers. So the Equipment Leasing and Finance Association, a trade group, lobbied the Fed to expand the TALF program to sales of farm equipment and other machinery. The association's president, Kenneth Bentsen, a former Democratic congressman from Texas, met with the Fed's general counsel and followed up with phone calls and letters. The Fed eventually expanded TALF to cover Deere, Caterpillar and other equipment makers...
It is turning into an economy of the connected, with a heavy splash of socialism.

1 comment:

  1. IF some nefarious hostile political power wanted to undermine the US economy, what kind of policies would they try to bribe corrupt officials to implement?