The Bailout is Bullsh*t

This is political I guess.  Sorry, but it's important to me.  Giddyup.

This market bailout by the federal government is good in the short term (as evidenced by the 2 day rebound of stock prices on Wall Street which pretty much erased the losses earlier in the week).  Confidence is back.  Good old Uncle Sam to the rescue.  Here's what it really means:

With the money that you and I (probably you because I'm a poor comic) put into the federal government was used to erase horribly irresponsible fiscal behavior.  This is beyond debate.  Lots of smart folks saw this credit crisis coming years ago, some saw it recently, whatever the case, enough people knew this was coming to have prevented a national and international financial crisis for the US.

Take The Economist, in 2005, they called the housing bubble bursting because it was obvious to them, even then, because people were borrowing beyond their means, lenders were lining up ('when banks compete you win!'  Heard that slogan before?) to toss money at anyone who wanted it, and the market was so inflated, a collapse was imminent.  They also said this would lead to a wave of 'failures'.  Yup.

There are more but this is not an I told you so.  What it really is, at its core, is an old boys club trying to stay on their surfboards as the latest wave lines their pockets, increases their margins, and keeps them rich.  Long term fiscal solvency, once a staple of Wall Street giants like Lehman Brothers, was cashed in long ago.  No one went against the tide.  It's easy to say they should have known better.  Even if I did know better, I am not paid for that knowledge.  There are people who's job it is to predict things like this and if they did predict it, no one listened.

Now, here is why this government bailout is wrong:

-It's corporate welfare.  You know how people complain about 'white collar criminals' serving easy sentences when they stole millions and regular criminals doing hard time because they robbed a grand from one person?  Where here you go.  The giants screw up, we pay.  Note that if said giant recovers and thrives, you and I will never see that money but that's secondary.

-The US has moved away from LBJ's social welfare state.  We're not in the business of saying, 'Hey you screwed up, here are all your losses back and some money to start again'.  It's about risk.  Where are the FDIC bailouts for small businesses and a nearly extinct middle class?  It's silly right?  Guy opens a bar, the bar fails because he charged $.50 per beer, he gets all his money back from the government.  That would never happen right?  

-It's obvious to those of you that are politically oriented that I'm a fiscal conservative.  To that end, I have always believed the greatest factor in economics is consumer confidence.  If people feel like they are getting value, they spend and all is well.  Now in the short term, we've got that with the bailout.  I'd trade the short term high five party for a dependable market long term.  We have literally put a finger in the damn with a 1000 leaks and are calling the problem fixed.  Once we wake up after the weekend, no one can afford to fill up their gas tanks, homes are still being foreclosed at record rates and we're paying more for less.

-Philosophically, I loathe government intervention to make up for irresponsible behavior.  In the same way I hate the idea of someone receiving more welfare for more poor decisions, I hate the idea of Wall Street cronies who've cost the nation billions so they can go back to business as usual, getting bailed out.  This is a slippery slope people.  Alarms should be going off as this happened on a conservative president's watch (albeit that watch was blindfolded, drunk, and locked in a basement with loud sitar music blaring).  

-Here's the last thing I'll say about this.  Confidence and hope are great things.  They really are.  But would you rather build a house of cards or one made of steel that was hard to build?  Right now, we're choosing the card house.  We'd rather people feel good about themselves then do the right thing for the long term health of our country.  I find this step taken by our government to be a slap in the face to the thousands of Americans who are scraping to get by.   The market was crashing and we fixed it... for now.