On My Soapbox...

Over the past few days, I have found myself cheering for Nancy Pelosi and the Democrats. That’s because our esteemed Treasury Secretary Henry Paulsen has stated that $700 billion is necessary to save the US Financial market. I’m no economist, but $700 billion is not a small chunk of change, even for the US government. But between President Bush and Paulsen, $700 billion will be given away – details are sketchy (this article is the best I could find), but the consensus thought is that the big winners will be Wall Street companies (AIG, Bear Stearns, etc.) and Fannie Mae and Freddie Mac. I was trying to find out details of the proposed plan today, but I couldn’t find very much at all. In fact, $700 billion is a ballpark estimate, and experts say that this figure could rise to as high as $1 trillion!

Personally, I’m outraged by this. I understand that some support is necessary, but who came up with the math that they need so much money? Here’s an idea: take this bailout money, infuse the FDIC with this money and let the companies fail. Companies cease operations, go bankrupt, or get acquired all the time - look at WorldCom, Delta, Delphi, or a host of other companies. The government shouldn’t be obligated to protect businesses, and even if it feels it’s aiding its citizens by stopping the failure of the economy as a whole, shouldn’t there be a little more investigation as to why the businesses and markets are failing before they hand over $700 billion?

The US government currently feels that $700 billion will save our economy and prevent a recession. I say, how do you know it will save our economy? Why is it that these companies are in such a bad way? Sure the credit crunch and the mortgage crisis are major issues, but is that the only answer? Are these companies managed well, are they viable businesses in the 21st century, will they continue to need government sponsorship to operate after the bailout, is there any chance they will pay back their “loan” from the government? I did 3 months of research before I bought a $1,300 TV. Companies I audit spend thousands on studies and research to determine if a $2 million Oracle system is good for them. Even government spends millions before major building projects like highways and bridges, usually around $100 - $200, million are funded. Did anyone do any studies, perform any research, interview any company officials, or look at any market data before coming up with this $700 billion figure?

I feel as if the government thinks it has to make a snap decision. If he keeps this up, George W. Bush will go out with the all-time lowest approval rating - Herbert Hoover and Andrew Johnson are both excited to get a friend on the Mt. Rushmore of loathed presidents! The Republicans want $700 billion now, today. The Democrats, with Nancy Pelosi in the lead, are trying to push Paulsen to send a plan for $150 - $200 billion now, and then if more is needed a second bailout can occur. It sours my stomach, but I have to agree with Nancy Pelosi’s plan, as I think it gives the economy a chance to correct itself without being acquired by the US government. If it needs some more cash later, so be it. But at least more data and information will be available, and better decisions can be made. Take some extra time and make the right decision. Heck, with $700 billion, you could probably pay back most of the money the investors lose if these companies fail!

Damn you Hoover!

In a country where are schools are constantly under-funded, energy costs are sky-rocketing, and retirement funds are being depleted faster than they can be refilled, how are we suddenly able to come up with $700 billion as if from now where? I’d like to see Congress come up with legislation (and money) to improve schools, hire teachers, research and deploy alternate energy sources, and let me live comfortably in retirement. Those are things I’ll pay for. And for the most part, I’ll pay what it takes because I understand the consequences of inaction. There have been studies, investigations, and conclusions made in those areas, mostly because no one will take any action without an abundance of information. There still has been minimal government funding of those issues, and with the current crisis, the chance of those issues being taken up dwindles.

Yet when our economy has a downturn, which happens nearly every 10 years, we suddenly want to artificially prop it up with money we don’t have, for reasons we don’t fully understand, and with consequences we can’t possibly foresee. Maybe the government will wise up and these issues will spur our leaders to take intelligent, thought-out, and informed action. Yeah, and maybe I’m a Chinese jet pilot.