Wednesday, September 24, 2008

The $700 billion "do-over"

I must admit that I have not followed this mess as closely as some, and I must also admit immediately that I am not at all trying to downplay the suffering which some Americans have felt. What I do want to say, however, is that anyone who plays the market knew at the outset that the stock market is volatile, and there are no guarantees. It was a risk, and it was a risk they felt was sufficiently small (or, at least, acceptable). So when the market turns and people everywhere throw up their hands in grief and exasperation, crying, "help us, we've lost all our money!" - when that day comes, you will hopefully excuse me for being a bit disconcerted. NPR's writer put it this way:
The Bush administration's plan to bail out the nation's financial institutions represents an unprecedented intervention in free markets. If the Wall Street bailout is adopted, Republican Sen. Jim Bunning of Kentucky said last week, "the free market for all intents and purposes is dead in America."

A fundamental principle of free-market capitalism is that investors take on big risks to reap big rewards — but they also assume any losses that occur. The government's plan would radically alter that model, leaving profits private while making losses public.

The Bush administration wants the $700 billion buyout so that those upper-middle-class Americans who so deftly tend to think they are "above" the market can continue living in the manner to which they are accustomed. Wake up, people! If you can't afford to lose money in the stock market, you can't afford to make money in the stock market. Why should my taxed be raised such that people with three cars and a nice home and a yard and 2.5 children and a golden retriever be able to continue their weekly shopping trip to the mall? I work hard and I save my money. I should not be penalized because a bunch of people who are well-off and comfortable feel less so because of mistakes they made themselves. Don't buy a house you can't afford! Don't opt for an adjustable rate mortgage! Don't put thousands of dollars into the stock market that you can't afford to lose! Why do we treat stupidity like an incurable disease?

I know there are many people out there who are - or will be - negatively affected by the downturn in the market, including (probably) family members. I knew people who lost thousands when the proverbial bubble burst back in the late nineties. And I know that it is decidedly un-Christian to complain about helping others. But we need to understand where the true need lies. Helping those in middle-class suburbia who vote Republican and want to have the nicest landscaped lawn on South Walden Street get out of their self-imposed debts is not the real need. Providing food, water, medical care, clothing and shelter ("basic necessities," for those of you who can't remember) for those who have nothing, those who live on the street or in homeless shelters or squeeze a dozen to an apartment in dirty buildings just a few blocks from the flashy facades of Wall Street, it is these poor souls who need are help. Put the $700 billion into better public schools, into soup kitchens, into grants to help the underprivileged get their GED and get a job. Put it into buying seed and livestock for dirt-poor farmers in developing countries and into providing cheap medical insurance and daycare for single parents.

If my ranting seems decidedly socialist, I apologize. I have no problem with capitalism, as long as those - and only those - who choose to play the game are forced to abide by the rules. A $700 billion buyout, funded by the tax dollars of someone like me, is not the solution.


  1. Addendum: huzzah!

  2. Beautiful rant! However, why apologise for sounding socialist? Oh, sorry - I forgot momentarily that it's a dirty word over here ;)

  3. Addendum #2: why does news like this (from NPR) not seem relevant to those trying so hard to pass this bill?

    Wall Street opened sharply lower on Thursday amid uncertainty about a global slowdown and whether the House would follow the Senate in approving the $700 billion bank rescue package. In the first 20 minutes of trading, the Dow Jones industrial average was down about 150 points, while the NASDAQ fell about 25 points. The S&P posted a nearly 20 point loss.

    The Dow Jones Industrial Average bounced upward nearly 500 points the day after the bailout faily (the first time). Doesn't it seem like capitalism (as much as I may dislike it) is still working reasonably well?


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