Don’t do that!
Allow me to preface this post with the following: I’m no economic genius. Finance bores me to no end. In college, I avoided classes in economics and business on purpose. I love debating politics, especially foreign policy, con. law, and social issues, but I often shy from debating finances. I simply describe myself as “social liberal” and “fiscal conservative” and move on to debate a subject more comfortable to me.
With that said, I know enough about the “free markets”, capitalism and laissez-faire economics to know that the Bush administration’s $700 billion “rescue plan” and the $85 billion Federal Reserve bail out of AIG represent a slippery slope for government expansion and intervention in not only our financial markets, but our lives as well.
Where I come from, if a person accrues debt, living above their means, they don’t expect their parents to bail them out of their situation. Their parents more than likely will add words of wisdom and moral support, but in an attempt to teach responsibility, the debtor must pay the debts himself.
Why should corporations be treated any differently?
In essence, this is the situation we are facing. AIG, Lehman Brothers, Bear Stearns, Merrill Lynch and even Fannie Mae and Freddie Mac to a certain extent represent the “irresponsible debtor,” living well above their means, buying things on credit, hoping to turn a huge profit. Now that years of superfluous spending has gotten them in trouble, they run to their “rich daddy”–the Federal government–and expect some sort of financial assistance. Indeed, these irresponsible debtors expect you and me to pay for their mistakes.
At the risk of sounding naive, I propose we let these “irresponsible debtors,” sort through their debts on their own. If not, we can only expect these problems to occur again.
I realize that the markets have responded well to the bail outs, but this is the equivalent of a diet of candy and sodas. At first, there is a sugar high, but it will be soon followed by a hard crash due to a lack of sustenance.
While I’m not knowledgeable enough on economic issues to declare it the perfect solution, I do think John McCain’s response has been the best of any prominent politician thus far.
