I doubt I'm the only one who feels like we've been had. Treasury Secretary Henry Paulson's recent comments about his shifting strategy for tackling the financial crisis have made many people wonder whether they're being robbed blind -- and, adding insult to injury, whether the perps are kind of clueless, too.
Quick -- everybody under the TARP!
As if that weren't enough, I saw an Associated Press article about how if General Motors
Keep your pepper spray handy, Fools. I'm beginning to think that whenever anyone shouts "emergency," that shady, high-paid dude in the pricey suit and silk tie is getting ready to jump us.
The real tragedy: We're getting drained
Paulson, Ben Bernanke, and George "This Sucker Could Go Down" Bush told us that we needed the big bailout package, and pronto, to avoid financial Armageddon. When the House failed to pass the package on its first go-round, you might have thought Congress cared about constituents' opinions for once -- until they passed a second, sweetened version with a bunch of staggeringly dumb earmarks attached. It was hardly comforting to see that in times of supposedly grave crisis, these guys and gals were still looking out for their favorite special interests.
The result of Paulson and friends' shock-tactic tidings was a collective (and mercifully metaphorical) pants-soiling the likes of which I've never seen. But once Paulson got the go-ahead on the money, it seemed that banks proceeded to act as if getting that money was the solution in itself. So, wait, it was an emergency, but not that much of an emergency?
Lending really hasn't thawed much, despite the Treasury's actions thus far. And now Paulson says he's changed his mind about how to best use the Troubled Asset Relief Program, or TARP. Now he wants those billions to stimulate consumers, who are apparently in great need of credit for credit cards, student loans, and auto loans.
Excuse me while I get out the megaphone here: HELLO? TOO MUCH BAD DEBT IS PART OF THE PROBLEM ALREADY! Ahem.
It's our economy's dirty little secret: Consumers are already terribly overextended from all the bad and irresponsibly obtained debt that caused this problem in the first place. During the run-up to this mess, many companies expanded precisely because they were capitalizing on the free-floating, woefully artificial sense of "net worth" and "income" created by rising housing prices. (Said companies were gorging on the easy-credit gravy train, too). We've got to work these excesses out of our financial system, not add more of them.
The increasing sense that Paulson and our government officials are making this up as they go along -- and haphazardly slapping bandages on gaping wounds, while blindfolded -- is hardly comforting.
I'm further alarmed at the terrible precedents this bailout is setting. It's rewarding failure, punishing responsible parties, and promoting even more reckless spending, since there seem to be no consequences anymore. (Apparently, we can't afford consequences right now.) Don't get me started on how bailing out "homeowners" who can't afford their mortgages is not only economic crazy talk, but also implies that responsible people were the really big suckers. And who's footing the bill for all the money flowing right to the rotten players who wrecked our faith in the system? The middle class.
Robin Hood's evil twin is alive and well
I remain opposed to bailouts that I believe will sucker-punch us in the end. I'm a fan of merit and accountability, sink or swim. The stupid, irresponsible actions that have so damaged our economy have no connection to what makes capitalism great: rewarding success and letting failure flame out. By ignoring those tenets, the Treasury's current bailout strategy puts us on a very treacherous road indeed.
Our government seems determined to coercively take our cash, reduce our buying power, and indebt our grandchildren -- some sources say the actual government tab could be as much as $5 trillion. Frankly, I think we need to remind the powers that be who they really work for.
There are clearly a lot of things about the bailout plan that many of us do not like, but the Treasury's doing them anyway. Welcome to the new 21st-century collectivism, in which the majority of us get collectively, and repeatedly, mugged to save the bad players, all of whom raked in the cash while times were good.
Thanks for nothing, Paulson.
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