It’s either socialism or capitalism – don’t try to have it both ways, according CNBC “Fast Money” trader Jeff Macke.
Macke, a regular on CNBC’s afternoon market wrap-up program, told viewers on Nov. 10 that the proposed $25 billion bailout of General Motors (NYSE: GM) is completely wrong, even if it would save some jobs.
Under ideal circumstances, said the founder and president of Macke Asset Management, GM would be allowed to fail according to the dictates of free-market capitalism.
“That’s up for considerable debate and heaven knows we beat it to death around this network – talking about GM and their connection to jobs,” Macke said. “I would love from a free-market perspective if we had the squash to let this thing die and to let it go and let the free market work.”
But the federal government doesn’t want that to happen. Macke told viewers the Pelosi-Reid proposal, which appeared in a [1]Nov. 8 letter to Treasury Secretary Henry Paulson, urged federal intervention to rescue the ailing auto giant. Part of the bailout would aid in “the creation of green jobs for the future,” according to the lawmakers.
“Since we don’t – I vote we socialize it, take these things over once and for all and downsize them ourselves,” Macke said. “What we’re doing right now is just so namby-pamby and half. You know, we’re going to give them $25 billion if they make more environmentally friendly cars. That as a policy will not work.”
The ultimate ending under the Pelosi-Reid proposal is failure, according to Macke. You can’t have a combination of government taking the risk and operating in the private sector.
“You can look into your crystal ball. You can look at your goat tea leave entrails – whatever you want,” Macke said. “But, if you’re half capitalist, half socialist – you’re 100 percent dead. Do one or the other.”
Financial Times U.S. Editor Francesco Guerrera made a similar assessment [2]on any GM bailout on Nov. 10. According to Guerrera, allowing the struggling American auto giant to fail would deal a blow to the job market, but it wouldn’t mean the end of the global economy.