There are some days when I really wonder if the two are incompatible.
Seriously.
I heard the news on the other night that Congress had passed a $3.9b package to help offset real estate foreclosures and possibly bail out Fannie Mae and Freddie Mac.
This comes on the heels a few months ago of the bailout of Bear Stearns.
So, I guess the message is:
- if you are a large corporation with a lot of political allies, you can take big risks, fail and then the Gov’t will provide you a parachute OR
- you can be part of a mass of people who overextend themselves, fail, threaten to vote a representative out of office and the gov’t will bail you out as well
Perhaps I’m being cynical here and, perhaps it is Congress’ fault in the first place that both1 and 2 were happening (see Thomas Sowell’s article on Bankrupt Exploiters), but it seems to me that you want to let these companies fail. You want the market to correct itself naturally.
I may believe too much in Creative Destruction, but in a vote of something like 72-13 (where were the others?) only a few senators had the foresight to say, “we’re further leveraging our grandchildren’s money to pay for this…and it’s not a good investment.”
At first, I was frustrated. Then, I realized I’m an idiot. It’s an election year. This short-term pacification is what leads to re-election.
Give the lollipop to the 2 year old now to make him stop crying. Who cares if he is a spoiled brat later?
By then, it’s somebody else’s problem?
Am I making too much of this?
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