The Bailout

Since it is in the news so much, I decided to give you my opinion of what should be done relative to the "Bailout". I believe that the government should let them fail if they will. I do not think they will and I do not think it would be bad if they did. For years they made millions and evidently did not believe that the bubble would ever break. SURPRISE! Especially with Mortgage Backed Securities and Derivatives and default swaps(really unregulated, unloss reserved insurance); all of which are side-bets in my mind. I guess they did not "hedge" well enough. Based on the money that they made during this time, it seems that they would have amassed a large "loan loss reserve" in their own books and made arrangements for failure. Aren't these investment houses suppose to be able to help us plan for the future and increase real wealth? Huh, huh, huh?

So let them fail. I do not think that will happen. I think that they will find a legal and creative solution to the problem without government intervention and my $5000 dollar commitment. That is what it will take for each person in the US over 18 to pay for this Bailout. I am not sure of the details of the House Republicans plan submitted in contrast to the Treasury Secretary's plan, but it sounds pretty good. Granted I do not know all the nuances of this deal, but using fear tactics and moving so fast is also not good. In my business career there were very few situations where my senior managers came to me and said "We have to do this immediately" where I didn't say "well, then let's wait a day or two!"

The basic fear is that credit will dry up and businesses will not be able to do what they need to do credit-wise to meet payrolls, buy goods and services and purchase adequate inventories. Baloney!! If liquidity is the problem, and it is, they operate with less, sell off assets, reduce staff or in other words "hunker down" (Those are words being taught in finishing schools instead of the words cut back and spend less). Remember those words big, big investment banks! You have operated with such largess and lack of self control that you now want to be bailed out by small business and family owned businesses that operate day to day. Again, Baloney!

And finally. The word that describes the whole mess? GREED!

What do you think?