One of the few regrets I have in my life is that I know so little about money. I don’t understand how money really works. I never learned about investing, stocks, bonds, money markets, et cetera. So please understand the the comments I make here reflect not the musings of a financial wizard or economics expert, but the thoughts of someone who relies on common sense when all else fails. Having said that…
I got a bad feeling about this, Sundance.
Since I don’t know that much about economics and financial matters, I have to speak about the current meltdown in the financial markets from the basis of a guy who DOES understand marketing (my day job), capitalism (I’m a big fan!) and common sense (with which I have at least a passing familiarity).
In the big picture, we get in trouble when we try and gin the system. Captialism is like a pair of scales. We can call one side “supply” and the other, “demand.” When you put your finger on one side or the other and skew the weight, disaster ensues. The trouble is, the guys that have ginned the system – the investment bankers, the mortgage bankers, and the politicians – are the self same guys who mucked everything up, and are now telling us that they have the answer to fix things. My daddy used to tell me they could pile it pretty high and pretty deep, but I didn’t know they could get it to talk.
So after a week of disasterous financial news, with financial institutions getting bailed out, one after another, setting records for taxpayer’s monies’ spent (a trillion here, and a trillion there, and pretty soon you’re talking about real money), now we get the Congress and the President cobbeling out an agreement to Save The Economy. Their plan has three parts:
- prevent ‘short-selling’ of financial stocks
- provide government guarantees for money market mutual fund investors
- create an agency that will buy all the bad loans from the failing mortgage companies
Pause with me for a nanosecond whilst we consider the collosal stupidity of this.
The way to ‘fix’ things is for nature – and captialism to take it’s course. The longer we put off the inevitable, the more it’s gonna hurt. When I was a kid, and got a bad report card, I knew I was in for punishment from my folks. So I hid the card. Weeks later, the school called to inquire about where the report card was. To say that my punishment was worse than it would have been, had I turned in the card when I’d gotten it is an understatement. We need to take our medicine, let companies fail, and move on. No amount of finanacial BandAids are gonna do anything other than make it worse, and hurt more when we do, inevitably have to deal with it.
The idea that the government should guarantee investments is not capitalism. It’s socialism. The idea that the government CAN do this is wrong on two fronts – the government does not have the constitutional authority to do it, and our government doesn’t have the money to make it work.
What in the HELL is going on here?
I’m not a Chicken Little type, but I’m begining to believe that everyone in power is under the effect of some reality distortion field, that is preventing logic and reason from prevailing. The facts are these – we can’t buy our way out of this. We can’t print more money, use taxpayer dollars, nor legilate ourselves out of it. But there IS a way out. Here’s the Captain Digital Plan for financial salvation:
- No more bailouts. Let the chips fall where they may. We’ll survive.
- Stop spending money we don’t have. End government entitlements and subsidies. Period.
- Stop lying to the public. Tell us the truth.
- Privatize Social Security and Medicare.
- Pass term limits for Congress.
- Repeal laws that attempt to skew the system and impose artificial controls on the market.
That’s it. Do that, we survive, and live to thrive again. Don’t do it, and we’ll be relearning the lessons our parents learned during the Great Depression.