Risky Business

Well, it’s been a long time since I’ve posted anything. I’d like to say I have a good excuse but I guess that laziness will have to suffice.

Well, it looks like Congress has come to a verbal agreement on the proposed $700 billion government bailout plan. That would be the bailout that was proposed by the Treasury Secretary of the current REPUBLICAN administration! Reagan and Goldwater, fathers of the modern conservative movement, might be spinning in their graves fast enough to actually reverse the rotation of the earth. I understand that the government has an interest in preventing the economy from colapsing or sliding into a recession or depression…sometimes. That’s why Alexandar Hamilton proposed our first National Bank and it’s why the Federal Reserve was created. But the fact that this is happening 40 days before an election has the rhetoric all hopped up on goof balls. I have three main issues with this whole debacle. First, as a Republican it saddens me to see my party just go along with this. This is Socialism Light (and maybe not so light at that) and not only does it violate one of the primary conservative principles – the free market and the lack of government meddling therein – but it’s a dead end road for Republicans. They won’t get credit if this all works and they’ll definitely get the blame if it goes south. You see, the left wing of the Democratic party has hardcore socialist leanings. Republicans cannot out New Deal the original New Dealers. My second issue is with two of the rumored provisions of the legislation that Congress will be sending to the president. It’s been said that the new bill will strip most of the so-called “golden parachutes” from CEOs and other top executives of companies that fail. Golden parachutes refer to clauses in executive contracts that allow executives to leave the company with a large lump sum of money. It’s kind of like the signing bonus in the NFL in that it is given regardless of performance, only it’s given on the back end. It’ even rumored that the provision might be able to be applied retroactively. One of the other scary (again rumored) provisions is that judges might be able to review individual mortgage contracts and change them if they find them unfair in some way. Both of these provisions speak to a fundamental lack of understanding of one of the foundations of our society; the inviolable nature of contracts. This was one of the Founding Fathers’ biggest issues and one of the things that they all agreed on. The Founders split into bitterly opposed factions early on in the beginning of our republic, but one thing that they all agreed on was the sacrosanctness of property rights and the only thing that could secure property rights was the inviolability of contracts. The founders saw contracts as a way to save both individuals and businesses from the whims and caprices of an unfettered government. Now don’t get me wrong, I understand why people are upset when they hear of a CEO that runs a company into the ground because of greed or just plain incompetence and then leaves with a cool $20 million in his pocket. It’s the same reason people don’t understand why A-Rod gets $25 million a year but a teacher, policeman or fireman get $25 thousand. But you know what? Unless you’re a share holder with that company it’s just none of your damn business how that CEO is compensated. And if you are a share holder then you have a voice in how the board of directors do things and you should express your concerns at the annual shareholders meeting. The government has no business reworking contracts whether it’s a contract between a corporation and its executives or between a corporation and a mortgage holder unless there’s some sort of fraud involved. And I’m really getting tired of the term “predatory lending”. You know what, if you just blindly signed your mortgage without understanding its terms, without asking any questions about things you didn’t understand then you, my friend, are stupid. If you are enough of an adult to sign your name to a piece of paper that obligates you to 30 years of debt at $100K or more then you need to be adult enough to either live up to that obligation or take the hit and suffer the consequences if you can’t.

But here is what I think is the underlying problem with all of this. Americans (especially the generations that came after the Great Depression) increasingly feel that the government should insulate us from, and ameliorate any of the consequences associated with, the everyday risks of business, the market and life itself. Before the 30’s, putting your money in a bank was a somewhat risky proposition. If the bank failed you were SOL; bye-bye life savings. Those of us born after the FDIC came about don’t know what that’s like. If my bank fails, I don’t loose anything as long as my accounts are under $100K. Back in the Dust Bowl days, if your house was destroyed and all the topsoil on your farm blew away, you packed up what was left and moved somewhere to “start over”. Now, people expect FEMA to pay their hotel bill while they wait to get their check from FEMA to rebuild their house in the same below-sea-level spot. And now both of the presidential candidates, responding to the current financial meltdown, are saying something like this: “The government has to step in and do something about this crisis because millions of Americans’ homes, investments and retirements are at risk.” Holy shit! You mean investing in the stock market involves risk? WTF! Why didn’t anyone tell me that when I invest my money I’m not guaranteed a 20% return for life. You mean if my 401K isn’t performing well I might have to work a few extra years? Outrageous! And now you’re telling me that just because I signed a mortgage that allowed me to make interest-only payments for the first five years and then raises my interest rate 3 points and then requires that I start paying down principle and now I can’t make my payments that I might loose my house? That’s just crazy talk!

Maybe it would serve us well to be reminded of that old cliche: Nothing is certain but death and taxes. You can modify the latter component if we keep allowing government to “insure” more and more aspects of our lives to read “higher and higher taxes.”

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One thought on “Risky Business

  1. So did you miss the part where when you deregulate everthing that greedy people will find a way to take folk’s money until it finally blows up?

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