Sunday, September 21, 2008

Don't Bail Me Out, Bro!


What the heck is going on here?

First AIG gets a big fat bailout for $85 billion of taxpayer dollars, then a bailout slush fund is proposed by our "financially conservative" president for $700 billion. That's no small chunk of change. That is approximately $200 billion more than the Iraq war has cost us so far. It is 2,200 "bridges to nowhere." So where do these financial bridges go?

They go to all the guys in nice suits like the board of AIG pictured above. These poor guys, they've had some tough times. Knuckleheads. Rascals! Wall Street just got drunk, according to President Bush. So instead of making them cleanup their own mess and endure their self-induced hangover, we are going to mop their floors with our money.

Which of these two men do we elect? Which of these two men is in charge? I only know the answer to one of these questions.

The main justification for this massive entitlement program for our hard-luck, ivy league banking community is that if we didn't do it, we would not be able to contain the disaster. The disaster would be so big, we can't even describe it to you. Most of us tend to accept whatever men in dark blue suits say, after all they are richer and more educated than us. And, it really is confusing. Collateralized Debt Obligation, what the...? I doubt they even know what is going on themselves. But, to ask a simple question, if Wal-Mart made a series of really bad decisions and was unable to pay its bills on time, would the American people shout to bail them out? Would that situation be too complicated to understand? Would the disaster be impossible to contain?

Here is my understanding of the situation. Our centralized bank, the Federal Reserve, held mortgage rates artificially low for too long. Our centralized government backed Fannie and Freddie, basically saying, no matter how greedy you get, we'll back you up. Fannie and Freddie then decided since they were gambling risk-free with other people's money to buy up as much debt as possible. Normal people were trying to realize their American Dream by buying houses and were making decisions on false economic signals. Builders were over-building. House prices were inflating. You don't need to be an economist to know this, you just need to have been paying attention to where you live. Peter Schiff explains it way better than I could.

This post could go on forever. But out of respect to our many, many readers, I will cut it short. The final analysis is this: A small cadre of men runs our banking system, and they are not elected by us, nor are they audited by our elected Congress. They operate under the delusion that they can manage our economy better than the free-market could. When they mess up, they immediately snap into stiff stances and say, "Not on my watch." So rather than paying the piper for their mistakes, we get to.

And our Congress, which has been reduced to "an inkblot" (thanks, Bruce Fein), just rubber stamps and passes the buck. Pay attention America! Your bank accounts just got smaller. Since last I checked, our country was massively in debt, which means the capital for these buy outs is being printed out of smoke, thus inflating our dollar even more.

I still don't understand what it means to say that part of this bill is to raise the debt ceiling. "Debt ceiling"? Sounds more like a debt target to me.

1 comment:

Nicole said...

You have expressed my sentiments exactly (though I've only read Part One so far). I must say I feel ill-equipped to understand the complexity of America's current economic situation, but I do have a general feeling that this bailout is the wrong move.

Now I will move on to reading Parts Two and Three.