Sunday, May 24, 2009

All the King's Horses

This is what I was saying about how lots of people get hurt by TARP junk. In fact, I'm not sure that any of these "bailouts" have really helped anyone.

In a simplified case-in-point:
  • The government gives or force-feeds funds to an industry or organization.
  • The government then claims it can dictate how the recipients spend any and all monies (not just the bailout money). The taxpayers are irate at the recipients of the money, not at the government for its carefree spending.
  • The recipients cancel plans for any spending that might cause negative PR. Sponsorships of golf tournaments, naming rights for buildings, business travel, capital investments (new equipment/buildings), etc.
  • Lo and behold, those would-be suppliers/providers are now suffering and in need of bailout money themselves.
Vegas is suffering. Hawaii is suffering. Durable goods are suffering.

Guess what, Mr. Obama. Your intervention in the marketplace has been a complete failure. You wanted to put more money into the economy, but now everyone is afraid to spend money because you own them (see AIG's attempt to compensate its employees according to their contracts). Workers are being laid off as a result (companies/people not spending money = lower demand = layoffs). Those workers, now, instead of helping the economy produce, are now drawing unemployment ($$$) and (WOW) universal health care ($$$) sounds good to them. Tax collections from displaced workers are also reduced proportionally. Then, of course, you have the omnipresent gloom cloud hanging over the entire country as they realize that it will be mathematically impossible to ever repay any of this money. Mr. Obama, it would appear that your plan is to devalue the dollar so much that our debts become practically worthless to the debtors. Your budget is over $3 trillion for just one year! That's not your money, fool. 

Would it not have been better to have allowed AIG to simply file bankruptcy? We survived Global Crossing. We survived Enron. We survived Long-Term Capital Management and Tyco. And we would have weathered this storm as well. I mean, that's the entire point behind things like FDIC insurance, bankruptcy court and a competitive marketplace.

Here's hoping the next president can just call for a 'do-over' and erase the countless mistakes of Obamadom without any ill effects.

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