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September 25, 2008 – Comments (16) | RELATED TICKERS: FMCC , FNMA , AIG

If you haven't read it, read it here. This is dumber than recommending Select Comfort four times. They're actually telling us to demand that our congresspersons nationalize the banking industry. What's next? A burning of balance books? A fire in the U.S. Treasury? Renters having to wear insignia on their arms showing how unpatriotic they are? A night of broken IRA's?

Nationalism and socialism (and Nationalist Socialism) are not what America needs right now. Freedom and patience are what America needs right now. The last time government intervention and a curtailing of freedom helped an economy was... well, never.

It's not just offensive to our senses that our government would step in to ameliorate the effects of the bad risks taken by men with 9-figure incomes. It's not just wrong that they never did anything unwise, because they knew they would be taken care of by their boys Bernanke and Paulson if anything were to go wrong. It's unhelpful to the economy to preserve failing companies, no matter how many retirement accounts, credit card lines, and insurance policies are tied to those companies.

If you're a small-minded liberal, angry at the injustice of gov't rescuing rich people, you are too small-minded to see the danger of letting those companies fail. However, if you are hell-bent on saving those companies, so as to prevent any serious injury to the economy, you are still too small-minded. The worst times for an economy are when it sees its greatest innovation. If we were to throw open the gates of commerce, stop handing huge advantages to big corporations in the form of regulation and injust taxes, and trust in free people and entrepeneurialism to overcome the hard times ahead, we would recover faster than anyone thinks possible. We would see economic growth that Bill Mann is on record as saying is impossible for us.

Freedom works every time it is tried. The problem is, it takes guts to try it. (Not to mention that everyone is a genius and thinks "I'm too smart to believe in a simple thing like freedom!") That's why we didn't try it any time between 1929 and 1981, and why Clinton had to be forced to try it in 1995. We just don't like things that are scary, and we don't want to be left out when everyone is talking about their sophisticated, complex ideas. For instance, the bailout.

16 Comments – Post Your Own

#1) On September 26, 2008 at 12:56 AM, devoish (96.39) wrote:

Can I be angry at the injustice of Gov't rescuing rich people and hell-bent on not saving those companys for the reasons you listed as opposed to being vengeful? I think the executives are just as entitled to being saved by unemployment benefits or jail time as any other American taxpayer who has contributed to our economy. Nothing more, nothing less. I agree with everything you wrote except two things. I believe that Bush and his Republican kiss-asses are far more to blame than Clinton, and this is more Fascist than Socialist.

One rec for you.

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#2) On September 26, 2008 at 1:45 AM, DemonDoug (32.21) wrote:

Flea, I'm right with you, and I'm going to write a blog to address this specifically.  Keep your eyes peeled for it soon.

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#3) On September 26, 2008 at 3:26 AM, richman1211 (26.94) wrote:

Great post Flea.

I'm so sick of hearing who's fault this was or is from Barney Fife and friends. I wish the Dems would spend more time thinking about what's the right thing to do here and not what they think will be politically beneficial to them - it's pathetic and they insult every American thinking somehow that they're Fooling us.

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#4) On September 26, 2008 at 4:14 AM, jester112358 (28.95) wrote:

Yes, its very obvious from Pelosi to Barney Frank, they are mostly bent on re-election.  My suggestion, except for those like Ron Paul who are actively working against this bailout, we vote for the opposite to the incumbant-if your incumbant is a democrat vote for the republican and vice-versa.

 Your observation about the key being freedom is so important. Another Rec for you!

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#5) On September 26, 2008 at 9:41 AM, devoish (96.39) wrote:

It was not Dems who decided to announce this disaster this week was it? You can decide to blame the Dems for being concerned about political posturing here but if Republicans keep the white house it will cost a lot more than 700bil as evidenced by experience of the last 8 years.

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#6) On September 26, 2008 at 11:06 AM, Jhana9 (21.22) wrote:

Let's keep in mind that it has been Paulson who is pointing out to the world that we "looked into the abyss". Now the market and the public is reacting to thinking there is an abyss (regardless of whether there really is one), and maybe Congress can't keep us out of it. Even our Pres told the country we are toast without the bailout. They should never have started the "be afraid, be very afraid" discussion if he didn't want everyone to be, well, very afraid.

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#7) On September 26, 2008 at 11:48 AM, dinodelaurentis (78.97) wrote:

fear mongering for fun and profit is a classic of the genre.

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#8) On September 26, 2008 at 3:36 PM, FleaBagger (28.07) wrote:

Devoish may have forgotten that I am ardently opposed to Bush and McCain. But I would like to point out that Paulson is on Obama's side, and Obama is on GS's side, and all of them are for some kind of bailout for their rich buddies.

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#9) On September 26, 2008 at 3:37 PM, FleaBagger (28.07) wrote:

Nice discussion! A rec for me!

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#10) On September 26, 2008 at 3:39 PM, TheGarcipian (32.77) wrote:

Glendorian, excellent points, as are devoish's. FleaBagger, I agree with you too, but like devoish, I'm concerned about what other fallout effects there will be. Overall, I agree with you though: we shouldn't be handing out money to bail out bad ideas, bad business practices and certainly not the executives who put them in place. It's always the fear of the unknown that scares people into doing silly things, as dinodelaurentis points out. All of this is excellent discussion. Another Rec for you!

Interestingly, this is the path the Japanese had taken in 1993. According to Fareed Zakaria in his new book "The Post-American World", we are going down the same path the Japanese went down fifteen years ago. In 1993, the US government told Japan to cut loose their failing banks... basically to swallow the bitter pill and allow the healing to start that much sooner. But the Japanese didn't do that, and they have dealt with a fifteen-year-long recession as a result. (I don't know if this was the only cause for their long recession; I think there was also corruption and other financial instability, but it makes for a good story, doesn't it? ;-)  And now, instead of letting our weakened banks fail, we are doing exactly the same thing the Japanese did. Will we follow in their footsteps?

Are we now doomed to the backside of Reagan's great "City on the Hill", hiking inflation to double-digit figures, devaluing our dollar, living perpetually in debt, following in the fallen footsteps of past empires like Great Britain in the early 20th century, and France before her, and Spain before that? What are the estimated downsides to NOT funding the bailout? Does anyone know?

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#11) On September 26, 2008 at 7:21 PM, thewindowlicker (28.38) wrote:

"What are the estimated downsides to NOT funding the bailout? Does anyone know?"

 The Garcipian poses an excellent question I don't hear being discussed anywhere. 

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#12) On September 27, 2008 at 9:31 PM, FleaBagger (28.07) wrote:

I very good post, Gar, and you bring up several things that I want to talk about. First, the analogy to Japan's 15-year recession seems apt. The proposed floor for our troubles is more rigid as a ceiling. As for the corruption of Japanese financials and their cozy relationship with each other, with the government, and their incompetence, does any of that sound familiar? It is only the bailout that allows that to continue, as a free market would never tolerate inadequacy, whether it be from corruption or incompetence (both of which we seem to have abundantly).

As for an estimate to the downside of not funding a bailout, it would be just that: an estimate. And to whom should we look for such an estimate? To a government official who would become more powerful and more important in the event of increased government involvement in the economy? In history, estimates of the downside of government not acting have always turned out to be far too high, if tested, and economies left to their own always surprise with their resilience and growth potential. Does anyone remember the Wirtschaftswunder (link found via Wikipedia) of West Germany? Keynes, FDR's boys, labor unions, and most of Britain argued that such things were impossible, but it happened. By eliminating price controls and fighting inflation, West Germany deregulated its way into the approbative section of economics textbooks forever.

What if government doesn't do something? That same fear spurred congess, the president, and the fed into action, intervening to protect U.S. businesses that were essential to the economy, the U.S. consumer, and the tax base, and lending liberally to banks in need. What year was that again? Oh yeah, 1929. Smoot, Hawley, Hoover, and the federal reserve - heroes of economic thinking. (And that was never said sarcastically before 1930.) Fortunately, we eventually took steps to protect the consumer directly, under FDR, who forced higher prices by destroying the food supply while the poor were starving - oh wait, that didn't really help consumers, did it? But it did restore the economy in a jiffy, right? I mean, the Great Depression didn't last long after FDR's first 100 days, did it?

The truth is the Great Depression in the U.S. lasted until FDR started to repeal many of his burdensome regulations at the beginning of World War II. He realized that he needed economic strength to fight a war, and the only way he was going to get it was to try something he hadn't tried before: undoing what he had done in his first 9 years in office.

They say that when you find yourself in a hole, the first thing you must do is stop digging. But if you think down is up, you dig faster. And if you think that government controls (i.e. regulation of the banks or nationalization through government ownership of equity) are the way out of economic trouble, you might not be able to end a Great Depression within ten years.

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#13) On September 28, 2008 at 9:52 AM, lquadland10 (< 20) wrote:

Never under estimate the power of equal and opposite reaction. What I mean is I watch lou dobs and the gain of independent voters. All is not lost. Just vote. It is working. 

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#14) On September 28, 2008 at 9:52 AM, lquadland10 (< 20) wrote:

Never under estimate the power of equal and opposite reaction. What I mean is I watch lou dobs and the gain of independent voters. All is not lost. Just vote. It is working. 

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#15) On September 30, 2008 at 2:09 AM, pjani06 (29.26) wrote:

Amen.

Now, for the BAILOUT, read this:

See the link below for the FULL list of representatives with first name, last name, and state represented, & indicates if they voted for the bailout or against the bailout with CLICKABLE LINKS for their contact information!!!

see this here :

Now its personal, full names & links to all the Representvs. who voted YES or NO to the BAILOUT

this is far from over! 

do something, pat them on the back or convert them or...vote them OUT!

enjoy.

 

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#16) On September 30, 2008 at 3:35 PM, pjani06 (29.26) wrote:

Check this out, the solution to the mess, posted today by Karl Denninger from fedupusa.org / market ticker;

Denninger's "How To Fix Our Banking System" sent to all in Congress today Report this comment

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