Review of Bailout Nation

In January I put in a request at my public library to get Barry Ritholtz's Bailout Nation. They claimed to have ordered it back in March, but still no book at the library. So I'll have to content myself with the next best thing...

The NY Times has a review of the book. Here are some key bits:

Mr. Ritholtz notes that the government wasn’t always so willing to provide a safety net to banks. He contrasts efforts of George W. Bush last fall to those of Franklin D. Roosevelt in the Great Depression. Roosevelt, he says, came to the rescue of ordinary people, financing public works programs that created jobs and making mortgage loans to homeowners facing foreclosure.

It all started to change in 1971, Mr. Ritholtz writes, when the government dished out $250 million in loan guarantees to Lockheed, which was ailing because it had submitted low bids to win government military contacts. That bailout paved the way for the $1.5 billion rescue of Chrysler in 1980.

He writes that this rescue left the carmaker with the same management and did nothing to change onerous union contracts. If the government had allowed Chrysler to fail, he argues, the United Automobile Workers might have been more eager to make health care and pension concessions that would have made the industry more competitive.

The author argues that someone might have scooped up Chrysler’s remains and made better cars, spurring rivals to do the same.

Today, instead, foreign car manufacturers dominate the American market. The author writes that the U.A.W.’s membership has fallen by more than two-thirds since its peak of 1.5 million in 1979. And Chrysler recently declared bankruptcy along with G.M.

“If that’s your idea of a successful bailout,” Mr. Ritholtz writes, referring to the earlier attempt to save Chrysler, “I’d hate to see what your idea of a losing one is like.”