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Bailout rant
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I wrote this in a moment of irrational grumpiness about the proposed bailout.
A letter to Congress
September 22, 2008
How dare you?
How dare you propose that we shield these institutions from the consequences of their bad decisions?
How dare you even consider abusing the trust placed in you by your constituents--to use the resources they provide to serve the best public interest--by making sure that investors don't have to pay their gambling debts?
We are faced with a financial crisis of nearly unprecedented magnitude. There is much investigation yet to be done, and I have no doubt that future economists and historians will produce many theses and dissertations on its causes and effects. What is becoming clear, though, is that our banks are crippled by the fact that they are in possession of assets whose value is largely unknown, but increasingly doubtful. These assets were purchased by these banks in the hopes that they could make money from them. That's investment--and investment is always a gamble.
Folks, gambles don't always pay off. And when you make a bad bet, you lose your money. That's the way it works. That's why you think carefully before you invest, do your research, and take risks that you can safely take on. Hopefully, your bets pay off more often than they fail.
What kind of message are you sending a company when you make sure that they don't have to face the consequences for bad decisions?
We've been told that we can't allow these companies to fail, that they are too important. Well, when we have individual companies which are too important to our economy to be allowed to fail--when we have to rescue them, no matter what sort of stupid, reckless bets they have made--then I say there is something terribly wrong with that economy. I say that an economy built on that foundation cannot, and should not, be allowed to continue. If the price of keeping this economy standing in its current form is to shift hundreds of billions of dollars from taxpaying citizens to the institutions which made bad bets so that they can make more bets in the future, then I say LET THEM FALL.
There are many Americans who made some very poor decisions about buying homes. That's a sad and terrible thing, and it's going to cause a lot of pain. What, if anything, to do about that is another story, and one we will have to deal with. My gut says that if you lie about your income to take out a loan you can't pay back to buy a house, then you are going to lose that house. If you take out a loan which you know you can't repay, assuming that the value of your house will rise in time to sell it and make a profit, then guess what? You just made an investment, and a risky one at that. You made a bet, and you lost. Personal responsibility for bad decisions is just as important as corporate responsibility. But those Americans are already paying for their decisions. Millions of households are in turmoil because they are losing their homes. They're facing that loss already. And now the time has come for the banks which made those loans without seriously investigating whether the borrower could pay--and the institutions which encouraged that lending--and the institutions who bought those packaged loans hoping to profit from them--to face up to the fact that they, too, made a bad bet. They made a bad investment.
And you are even considering taking money from the citizens of this country to make sure that they don't have to pay for their bad bet?
How dare you?
We need to deal with this problem in its real form, and that is that we are living beyond our means. For a decade, we've been borrowing from the future. "Look at the growth," we're told. "Look at the wonderful prosperity!"
Folks, it's not growth. It's not growth, and it's not prosperity, when what you're doing is building houses on air and debt. For a decade, we've been climbing higher and higher on a ladder behind a curtain.. Well, now the curtain has been pulled away, and guess what? Our ladder is made of drinking straws and chewing gum. America just got the first call from the debt collectors. It's time to pay up.
We have been told stories about the legendary "greatest generation". We've lionized them for their courage. We honor them because, when we faced great danger, they stood up and put themselves on the line. They made a sacrifice to fix a problem with the world.
We have a problem now. There are several ways to deal with it, some of which seem to require little cost to us. But here's the problem: those methods are tricks. Illusions. Lies. Those methods are the same sort of false solutions which led us to the problem we face today. They simply shift the burden to those who will come after us.
The time has come to stand up. The time has come for us to make a sacrifice. Do we have the courage? Do we have the ability to take the hit, so that our descendants don't have to? Can we make the sacrifice, and face the consequences of our irresponsibility--and that of those who came before us? Do we have that courage?
Or will we make sure that our grandchilden curse our names, as a generation of fools and cowards, who saw the problem and hid our faces in fear and shame?
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