Kavmerica.com

The bailout was a politically motivated mistake. Your money went to companies which should have been left to go out of business on their own. It’s as simple as that. It’s almost as if no one on Capitol Hill bothered to ask themselves why are these companies in this position? Or perhaps they didn’t want to know why. After all throwing money at a problem will fix anything, right?

These companies started to fail because they made bad business choices. When your business model is broken an injection of cash is only going to take you so far. The problems with these companies start from the top down. The boards of the companies, the people who are supposed to be protecting the shareholders, are not doing their jobs. Take the case of Alan Fishman at Washington Mutual, the board at Washington Mutual gave the go ahead to pay him $20 million dollars just 17 days before the company went under.  If you are on the board of any company and you don’t know that the company is going to be going under in 17 days then you certainly are not doing your due diligence.  That’s the best case scenario, at worst it is criminal negligence.  I bet you wish you could get a job like Mr. Fishman’s.  It can’t be that hard to run a company into the ground, can it?

So why are we paying for these companies to be saved?  Good question.  The arguement has been made that we needed to save jobs.  At what expense?  Yes, jobs are important but supporting failing companies should not be a priority for the American tax payer.  On the low end the bailout will cost every American Man, Woman, and Child at least $2,800 each.  Thats $850 Billion divided by 300 Million.  Thats $2,800 that came out of your pocket.  Aren’t you mad?  The money would have been better spent being given back to the American Tax payer.  Or if the govenment feels that it needs to create jobs than start up public works projects.  That is a proven way to create jobs.  It helped build the Hoover Dam and pulled us out of the Great Depression.

The problem with these companies go straight to their business model.  They were borrowing money (Short Term Paper) to pay for their expenses that month.  They borrowed and then borrowed to cover the borrowing and then it finally dried up.  If you or I did this it would be called a ponzi scheme and we would go to jail.  However, when a large company does it and fails we need to bail them out.   Where is the accountability in all of this?  It isn’t there.  The American Free Market was ready to take care of the situation until the government interupted.  The Market was going to put these people out of business.

The bailout seeks to provide us with short term stability, or the illusion of short term stability, at the expense of the long term.  Worse, it has set a precedent that the government will intervene when this happens again in the future.  When this happens again it will be worse.  Companies will take even more drastic risks next time around with the expectation that if things go wrong the government will step in to protect jobs.  With this bailout we have removed any incentive for companies to be fiscally responsible in the future.

The Bailout was the wrong answer…