Washington saves the three-legged gazelle
What a frustrating two weeks it has been. Between the stock market dropping 3000 points, and the constant bickering between the presidential candidates, it was just depressing. The only two things that even made the week worth living were Tina Fey and the Red Sox. Through it all, however, the worst thing by far, in my humble opinion, was the final passage of the so-called "Government Bailout Bill," an "emergency rescue measure" that in my mind had about as much chance of rescuing anyone as throwing a drowning person both ends of a rope.
I suppose the reaction we saw on Wall Street told much of the story. They first proposed this bill two weeks ago, and it failed in the house, as Congressmen with a conscience listened to their consistuents and voted against bailing out Wall Street. After a week of telling everyone the "dire consequences" of the credit crunch, and stuffin g another few hundred billion dollars worth of pork barrel projects such as "tax breaks for run distributors" they managed to somehow get the bill to pass. Wall Street responded, just as I expected, plunging 800 points of the next 4 days and another 2000 points after that.
Unfortunately nobody in Washington seems willing to take on the real issues, and to realize that throwing money at the problem isn't going to solve it. In one report that I saw on TV the other day, they said that if the $750 billion didn't pass, we could lose 100,000 jobs in the financial sector. Now I'm no math wizard, but doesn't that come down to $7 Million for each of the jobs? If we're going to throw money at the problem, why not give each of those folks an even $1 million and call it a day.
Instead, the government is talking about taking on the "bad debt" of lenders who made poor loans, allowing them to go out and lend more money I guess. Does the federal government really want to become the "grand evictor?" Hundreds of thousands of people in the nation have defaulted on their promises to pay their mortgage. Right now, that "contract" that exists between a lender and their client, is between them. Under the government bailout proposal, the lenders get their money, and its up to the federal government to evict people from their homes and foreclose for non-payment. That's certainly not what I want my representatives in congress spending their time on – nor do I think our government needs to be known as the "evictor of last resort." Yes, they promise that they hope to take on these "bad debts" for 80 cents on the dollar, and talk about how they feel that the taxpayers will actually make money in the long run when the market comes back and the assets can be sold, but we all know that won't happen.
Brings back memories of watching Wild Kingdom as a child. They show the lioness raising her cubs, and taking them out on the hunt to teach them how to kill their own food. As she comes upon the gazelle herd, she instinctively seeks out the runt of the herd, the sick gazelle, trailing behind all the others. As the camera zooms in, all I can think about is… "you're right there…why don't you warn the gazelle and save him!" Of course, as we all know, saving the sick little gazelle, while it may seem an act of passion on our part, really isn't the right thing to do. The gazelle herd will be better off when the strong remain, and after all, the lion has to eat too. Though it may seem a radical thought, the government bailout isn't going to work anyway, as evidenced by the fact that the market is down 3000 points since they passed it. Throwing money isn't the answer, and turning the government into the worlds worst investor by having them buy up so called "toxic loans," is ridiculous. Some problems just need to solve themselves.
The real issue, in my opinion, is whether the United States of America, the pillar of so-called "Democracy" will be allowed to become a Socialist State. While that may seem far fetched, think for a moment about what goes on under a Socialist government, and tell me what we're missing. Under socialism, the state owns all or part of the industries critical to the day to day functioning of the country – such as banking, transportation, insurance, health care. The state controls how much people can earn, and they put forth as their goal the ultimate prospect of redistribution of wealth, from those who have – to those who have not. Just how far are we from that? Over the course of 30 days, the government has now taken an ownership interest in the largest insurer, and the 5 largest lenders in the country, and basically just nationalized Fannie Mae and Freddie Mac. The companies that agreed to accept help, had to agree to cut executive salaries. Those that refused were allowed to fail. Now, we're being given a list of other companies that, according to the government, are "too big to be allowed to fail." Certainly, nobody wants any company to fail…but in the end, it happens. The weak companies, or those that made poor business decisions, fail – and the strong survive. While that process is agonizing, in the end the whole society usually comes out better in the end with a host of stronger companies, providing more employment and helping keep our nation strong, free, and democratic. Bailing out companies that caused the mess to begin with just seems like a bad, bad idea to me.
Steve Levine is President of Steve Levine Inc., and an agent for REMAX First Choice. He has been ranked as the top REMAX Agent in New England for the last 9 years, and can be reached on the web at steve@stevelevine. com or by phone at 508 735- 4663.
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