The Wall Street Journal reported on Wednesday that the Treasury Department is planning to extend Troubled Asset Relief Program (TARP) funds to the life insurance industry. According to the story insurers who own Federally chartered banks would qualify for the program.
The news caused the stock of numerous life insurance companies to rally sharply this morning. It is hard to see how that is a good thing. But as one commenter to a wire story citing the WSJ article noted, “Failure is the new success.”
While insurer AIG, has been the largest beneficiary of Federal bailout monies, that has been the result of its impending doom due to credit default swap positions put on by its financial services division and not its insurance business.
One can’t help but speculate as to the next sector to dip into the seemingly endless well of Federal dollars but if all that is needed to boost the market is for the government to hand out cash and there is no consequence to printing money, why haven’t we been doing it all along?
I suspect it is a little more complicated than that.
We noted here a while back that the market plunge was actually a good thing because it meant people were looking at things realistically. Banks were insolvent and the economy was continually being held up by the next unsustainable asset bubble. We needed to rebuild on a more solid foundation. But that apparently is a little too much realism for some and it looks like the next asset bubble is being supplied by the Fed and their printing presses. Who will bail us out when that explodes.
