One of the biggest disagreements I have with many of my friends right now is on this Congressional "bail-out."
I am convinced that a $600 billion bail out will do nothing but postpone the pain. The country has been on a 20-year unrealistic monetary binge. The house my parents bought for $24,000 in 1964 and sold for more than $300,000 only 20 years later eventually appreciated to $1 million.
That was nuts.
Now, the market is in the process of collapsing because we were simply living in Fantasyland. As scary as it is to think about, a complete correction is needed. For the government to step in now and reward corrupt lenders and greedy buyers only sets in motion the same thing in the future.
Many of my cop friends and cop reporters will know what a Ponzi scheme is (http://en.wikipedia.org/wiki/Ponzi_scheme). They will also know what a pigeon drop is (http://en.wikipedia.org/wiki/Pigeon_drop) and what we have seen for the past 16 years is a high stakes combination of both. People who do this on the street are arrested, tried and sent to prison. Instead of arresting these folks, Congress wants to hand them more money.
One thing any cop will tell you is that giving more money to a confidence man is the wrong way to stop the scam.
This is a manufactured crisis. Remember it was almost three weeks ago they said if we didn't fix it in four days we would face financial Armaggedon. Well, the day after the House of Representatives voted down the measure the market went up 469 points coming back from a 777 loss while the bill was still on the table.
If it's such a big crisis, one that threatens our future, why are our federal legislators loading this crisis bill up with frivilous pork. One of the items is a tax break for the production of wooden toy arrows. So don't buy this "sky is falling" stuff.
Should the House turn down the bail out bill again, the market is probably in for a rough ride. Right now the private sector is holding off loans, etc., waiting to see how much free money they will get from us. But eventually they will have to go back to making good loans (in fact, they are making good loans now) and the economy will slowly recover.
Our parents lived through the depression. Not a great time, but it taught them a lesson of thrift and responsibility that has been lost on subsequent generations.
My 401k has lost more in the past three weeks than I paid for my first house in 1970, but I still don't think it's right to rescue the market for investors' immediate futures and leaving a huge debt for our kids in the future.
We keep hearing that actually the government will make money on this bail out. If you believe that, you haven't been paying attention to our government for the past few decades. Nothing they do makes money. Everything they do costs money and it's our money.
Some companies, especially the ones who feasted on the bad loans and high CEO pay, need to fail. They need to be bought up at a bargain rate, reconstituted and then effectively managed by new private companies, not the government.
Home loans should be renegotiated where possible, but frankly, people who purchased homes well above their means should lose them. That's how the system works. A lot of us bought and paid for homes we could afford. It should not fall to us to bail out those who got in over their heads.
That's not to say there isn't a role for government in this crisis. They could start (including at the State level here in Michigan) to give us back more of our money to spend. Instead of giving Wall Street $600 billion so it can continue on its merry way, how about splitting up that $600 billion in tax relief and see what many of us would do with that money.
My wife and I were on the verge of buying a big GMC truck and an RV. Those plans are on hold until we see what is going to shake out. Send me part of my $600 billion tax relief program and I'll buy that truck and RV and probably some other stuff.
Multiply that by millions of taxpayers and you have renewed economic activity. It makes more sense than pouring more millions down the Wall Street rat hole.
If not that, start building stuff again like they did during the Depression. What is needed is commerce and work. The Wall Street casino should be closed and the only way to do that is to not rescue them and make them going back to being the engine of economy and not the slot machine.
But I know one thing, I don't trust McCain-Obama-Biden and the Congress to fix a problem they helped create.