Seeing Red on the Bailout
There have been precious few times where a political issue has had me absolutely infuriated with white hot rage. Among these are the deployment of troops to Iraq in 2003 and the unnecessary tax increases in Nevada during that same year. All of the recent maneuvering around this bailout of failing banks similarly has me seeing red, especially since it came so close to being approved.
There's plenty of blame to go around. Changes in tax laws concerning the sames of primary residences encouraged everyone to speculate in real estate and be a "flipper". Unscrupulous agents sold loans that should have never been approved, knowing that they could easily sell them off and be gone before the results hit the fan. Banks were dumb enough to provide fountains of easy money. Freddie Mac and Fannie Mae let themselves go nuts with the assurance that government money would back anything they did. Legislators looked the other way as financial interests stuffed their pockets pull of lobbyist dollars. And regular consumers? Too many of them were so poorly-informed about basic finances that they somehow thought they could afford the giant home, the plasma TV and the brand new SUV on mountains of borrowed money and almost no income. In short, a lot of people lost a lot of money by throwing common sense out of the window.
I have a very hard time feeling any level of sympathy for any of the parties involved. This is probably because I'm a responsible consumer. Our family will have no non-mortgage debt by November and both of our cars are paid off. Our home is on a sensible 30-year fixed-rate mortgage with payments under 25% of our net income. My wife and I (well, mostly my wife) have cut our spending and budgeted very tightly to ensure that we stay financially secure.
This is where I get really angry. Despite being responsible and doing all of the right things, I'm being asked to shell out somewhere in the neighborhood of $4,600 plus interest to save people from their own poor choices. And honestly, I'm finding absolutely no reason to do so. Lenders who sold risky debt should fail. Borrowers who took out risky loans and bet against the market should go bankrupt. These parties should feel the full effects of their bad decisions to learn some harsh and valuable lessons in the management of both money and their own greed.
I was thrilled when I heard that the bailout package had failed to pass on Monday and subsequently infuriated when I heard that it was by a very slim margin and is likely to come up for a vote again. Some would say I don't understand the plan, but I understand this cow patty for exactly what it is. It will turn the federal government into a mortgage company, one that will buy up investments we know to be a horrible value for probably far more than they are worth (and yes, I know we're talking about paying as little as 40 cents on the dollar). It's a big pile of steaming socialism on a scale that should terrify voters and elected officials alike, especially with the unprecedented power it would give to the Secretary of the Treasury. It seems that Wall Street likes individual profits and socialized losses.
And they've spent the money to make it reality. Those voting in favor of the bill had collected an average of 50% more in campaign contributions from the financial services sector than those who voted against it. Those in favor were also overwhelmingly in "safe" districts with few prospects of losing the upcoming election even as they did something almost universally opposed by the electorate. It's nothing more than a "gimme" for bankers who bought the best Congress that money can buy.
I've heard that there is a plan to revive this bill for another vote, but I will universally and completely oppose even one red cent going into bailing any responsible party out of the mess they have found themselves in. There is nothing that can make such a plan palatable. It's a bald-faced lie, a demand by the financial services industry that their lobbying money had better have bought them a big fat sack of my cash. Pound sand, Wall Street. All the way to your failed bank.
Some will say that it is necessary to do something, anything to head off an economic collapse. I say bring the collapse on. We're a bunch of spoiled rotten brats used to living on someone else's money and it's about time we learned some lessons in frugality. We've been warned again and again of the terrible consequences of debt, and yet we chose to ignore these warnings. We're now reaping our just rewards for ignoring sage advice.