Tuesday, September 30, 2008

Don't Bail Them Out

There's no good reason to bail out the gamblers on Wall St.

From a free market perspective, they all deserve to go bankrupt. Every CEO and Executive who was in charge of one of those companies knew that they were trading and investing in bad mortgages. They knew they were gambling irresponsibly. They lobbied to have the regulations changed so that they could gamble irresponsibly.

They deserve neither sympathy nor money. But if you want to give them sympathy, go ahead. You can cry all over the outside of the tinted windows of their limousines and then wonder if they're even looking at you.

No, these people deserve none of the taxpayers' money.

The question is: what of the rest of us? If we let these firms collapse - as we should according to the laws of the free marker - what of the the rest of us?

Certainly the people who took out mortgages for houses they could never afford do not deserve to keep those houses. Sure, they were tricked and cajoled in to "leveraging" their nothing. Sure, the Wall Street bandits suckered them in for the sake of a commission. That means those Wall Street bandits should go to jail (and definitely don't deserve a bailout). But it doesn't mean those people deserve those houses.

So irrational Wall Street brokers deserve to go bankrupt. Some of the should go to jail.

The people with houses they can't afford will not get to keep them.

Fair is fair.

What about everyone else? Will the economy really fall apart if the U.S. taxpayer doesn't bail these people out? Somehow I doubt it. The U.S. has earned a long recession due to its attempt to stave off the recession that should have occurred in and around September 11, 2001. This can not be avoided. It's part of the natural cycle of the economy.

But will the whole world go in to a depression because the United States has a financial crisis involving irresponsible Wall Street gamblers losing money?

Somehow I doubt it. Somehow I think someone will create a financial instrument that will let it go on without the craziest, most irresponsible thieves on Wall Street. Somehow, I think we can live without billionaire investment brokers who don't actually produce anything.

But I don't think anyone really knows for sure, and the people who want this bailout to go through also have the power to punish the rest of society if it doesn't go through the way they want it.

That's what we have watch for.

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