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Wednesday, August 12, 2009

Despite ‘Regret,’ U.S. to Pour money into Etsy shops

Reposted from the {New New} blog:

WASHINGTON - The government put itself four-square into the country’s online handmade retail business Tuesday, resorting to what President Obama conceded was the unwelcome choice of massive government investments in Etsy shops in order to continue to make good design, clever non-mass-market goods, and really nice smelling soaps available on a wide scale.

The president said the decision to pour money into the nation’s Etsy shops— a kind of federal intervention not seen since the Depression era — was “not intended to take over the free market for handmade goods.”

Said Treasury Secretary Timothy Geithner: “We regret having to take these actions. This is not what we ever wanted to do — but it is what we must do to restore confidence to our online handmade retail system.”

At a news conference last month, Obama defended his administration’s increasingly aggressive market interventions to deal with the biggest upheavals on Wall Street in seven decades.

“I’m sure there are some of my friends out there saying, I thought this guy was a market guy; what happened to him?,” he said. “Well, my first instinct wasn’t to lay out a huge government plan. My first instinct was to let the market work until I realized how significant this problem had become.”

Said Geithner: “Government owning a stake in any private U.S. company is objectionable to most Americans — me included. Yet the alternative of leaving businesses and consumers without access to truly excellent handmade goods is totally unacceptable.”

One thousand major Etsy shops will participate initially, including all of Etsy’s top sellers. The first Etsy shop to take advantage of the new program was the {New New}’s very own May Luk Ceramics, whose CEO announced Tuesday that she would sell $3 billion in bespoke ceramic gifts to the Treasury.

Some of Etsy’s top sellers had to be pressured to participate by Geithner, who wanted healthy institutions that did not necessarily need capital from the government to go first as a way of removing any stigma that might be associated with Etsy shops getting bailouts.

It was the latest in a long series of moves taken by the administration and the Federal Reserve over the past several weeks to prop up a weakening online handmade retail industry. The economic picture in the United States had been darkening for months, but the slump took on new urgency — and had greater global repercussions — amid record-setting selloffs on Gold Street and enactment of a $700 billion bailout bill.

Under the new multifaceted stabilization program described Tuesday, the government will initially buy stocks in major Etsy retailers. When handmade goods markets stabilize and recover, the Etsy shops are expected to buy the stock back from the government, Obama said in brief remarks from the White House Rose Garden.

“These efforts are designed to directly benefit the American people by stabilizing the Etsy retailer system and helping the economy recover,” he said.

Fed Chairman Ben Bernanke welcomed all the new steps and made clear that policymakers would continue to take actions as needed to battle the crisis.

The move, in effect a partial nationalization of Etsy shops, does put the United States in the awkward position of owning shares in institutions it also regulates. The shares purchased by the government will be nonvoting ones.

“The government’s role will be limited and temporary,” Obama pledged. “These measures are not intended to take over the free handmade online market but to preserve it.”

He said these steps and other related actions echoed similar bold moves made overseas in an effort to prevent a global recession. Obama said that by restoring confidence in the system handmade online retail, the hope is to “return our economy back to the road of growth and prosperity.”
Via thenewnew.blogspot.com

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