Word: bailouts
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...watch the Big Three bailout saga unfold in Washington from halfway around the world here in Hong Kong, a phrase comes to mind that used to be commonly heard in Asia: "Too big to fail." There was a time when politicians, bankers and bureaucrats in Asian countries thought that certain large enterprises were simply too important to go bankrupt, no matter how miserable their performance. The resulting unemployment would be unacceptable, the impact on the financial sector and economic growth too great. That, in effect, is the same argument being used today by supporters of a government rescue...
...consequences of a Daewoo failure looked catastrophic. Daewoo, it turned out, had about $75 billion in debt and other liabilities - a hit the Korean banking sector could ill afford. The banks had just been yanked from the abyss by a government bailout (sound familiar?) made necessary by the 1997-98 Asian financial crisis. And the timing also could not have been worse: the economy was emerging from its deepest recession since Korea's accelerated growth began in the early 1960s. Arguably, a Daewoo collapse was more threatening to Korea than, say, a GM bankruptcy would be to the U.S., simply...
...Thursday night, Treasury's interim chief investment officer of the $700 billion bailout fund, Jim Lambright, and his team of crisis managers hunkered down with representatives of GM and Chrysler and worked all night to finalize the details of the deal. The result does its best to impose order on what would otherwise be the disorderly bankruptcies of the two companies, but in many regards it just passes the buck to Obama. To be fair, Treasury had but a week to address an incredibly complex problem and come up with a multibillion-dollar aid package - no small achievement, however lacking...
Read about GM's, Ford's and Chrysler's bailout plans...
...problem the incoming Obama administration will face is an uptick in union militancy. Blue-collar workers went into December fearing GM and Chrysler might collapse but left angry that Republican demands for wage concessions came at a time when bankers were using federal bailout money for bonuses. "I don't make $74 per hour," says Bryan Larkin, who is employed at GM's truck plant in Pontiac, Mich...