If it walks like a duck and talks like a duck...

[Note: I totally misreported on this post. Go here to check out my mistakes. But there are a few interesting points about Mr. Beef and TARP that I think are worth checking out so I'm going to keep this up.]

So I hop off the #6 at Jackson (sorry New Yorkers, we're talking about a real city here), cross Michigan Ave on my way to work. And as I'm walking west on Jackson I notice something different.

An empty store front--an empty bank.

For months I walked by the Midwest Bank on Jackson and often thought, "I wonder if I'd be any good at banking..." but then dismiss the thought about a block later... but last week I didn't even get to ponder my banking prospects. Instead I was left wondering what happened.

Everything was gone--the computers, the paper, the waste baskets, all of it. All I saw was a big empty room with a few desks. Gone were the people I'd look at while I walked by, gone was the manger who had her own desk and who I'd see talking to the people she managed. Like a Gob magic trick, those employees of Midwest Bank were gone.

Two thoughts quickly came to my mind:

1) What happened to Midwest Bank? Did it go under? Were all those employees laid off?

2) This was the first tell-tale sign of the recession (well other than my classmates and my own struggles finding a good job even with graduate degrees).

I'll tackle the second half of everything first. I like to say that the exception doesn't prove the rule, but in this case it seemed like it did. The recession was real because Midwest Bank closed one of its branches.

Sudden the recession had a face. And that face was the empty Midwest Bank.

I didn't know those people at Midwest Bank, but I was seriously bummed out walking by the empty bank. I assume (probably incorrectly) that they were all laid off (I'm sure some were relocated and the rest let go). And while I know a few people who have struggled to find work, this felt more real. My daily routine had some how changed even though none of it effected me personally.

Over the years I've seen empty store fronts and I've seen a business close. But this is some how different. This is a bank, and banks don't close. Banks get bigger or they get bought out. LaSalle Bank becomes Bank of America. That's how banks work.

But there I was walking by an empty bank front.

So what happened to Midwest Bank? They've taken TARP money and want to close down Mr. Beef (the Mr. Beef story is actually very interesting). However, the CEO of Midwest Bank believes the bank is in a strong position even if it is taking TARP money. The CEO above is new, and the old CEO isn't going to receive a golden parachute because of the stimulus. And here is more on the Mr. Beef story. (the owner of Mr. Beef went to Congress to say that the big bad bank was screwing over the little guy, of course the big bad bank is a pretty small bank, and who knows if Mr. Beef was paying his bills... but hey, he wants some of that TARP money).

Nothing on Midwest Bank layoffs or closing branches. If I was a real reporter, I'd give them a call, but alas, something tells me that if I did give 'em a ring and say "Hey, it's the Policy Boy from ThePolicyBoy.com" they would give me the old Chicago run around.

Sometimes Doing Something Is Better Than Nothing

Interesting tid-bit I ran across in the Economist this morning especially for those who don't think the bailout was or is a good idea:

Acting quickly also helps to cap the final bill for taxpayers. Sweden’s rescue of its banking system in 1992 pushed its gross public debt up to 73% of its GDP from 55% a year earlier. But the bad assets that the state took off the banks’ hands eventually turned a small profit. By the end of last year, Sweden’s public-debt ratio was 47% of GDP, well below international norms. Japan’s government, by contrast, allowed its bad-debt problem to fester. The fiscal support needed to prop up a struggling economy has led to a doubling of its public debt since the mid-1990s: it stood at 170% of national income by the end of last year.

Pretty much, doing nothing can have dire consequences. Many historians and economics believe that the lack of action by the Hoover administration in the late 1920s and into the 1930s only made the Depression worse. While FDR's New Deal programs had limited success, that may have been in part because it was too late—and it's hard to claim that the New Deal was a failure.

But one of the big criticism that I've come across concerning the stagnation of the Japanese economy since the early 1990s has been the lack of policy initiatives and action—and when they finally came their impact has been limited. Too little too late? The Nikkei 225 was at 18,650 at the start of 1995; today it sits at about 9,457 (losing about half of it's value).

Meanwhile, Sweden's quick response to crisis is probably part of the reason as to why we have not seen stagnation in their economy. (Sadly, I can't find a value for the OMXS30 from the mid-90s, but I'm pretty sure we'd see the OMXS30 up over the last 13 years or so).

While the bailout might not be ideal and it might now fix this countries financial problems quickly or completely, it is something. And historically, doing something has been much better than doing nothing.