Friday, September 19, 2008

Save People Not Corporate Debt.

The US government is wrong dealing with the credit crisis. They are making the same mistake that lead to this current financial problem in reverse.

Joe Blow buys a house for $200,000 suddenly people say Joe Blow's house is worth $500,000 and offers Joe Blow a 125% second mortgage to let him buy a boat. Now Joe Blow owes around $550,000 dollars but has a boat. Suddenly, the market realizes that Joe Blow's house is only worth about $250,000 and starts panicking and raises Joe Blow's interest rates and he's having a really hard time making his payments. They say they are going to foreclose on Joe Blow's house! Joe Blow figures out that $550,000 is less than $250,000 and it's about $300,000 in his interest to let them keep the house. Joe Blow lets the dumbasses keep his house. As do all the Joe Blows who find themselves in the same situation.

So now all these places which suddenly took millions upon millions upon millions of dollars worth of hits because they were giving really bad loans to people who couldn't pay them back and no longer had anything worth what the price of the loan was started to crumble and die. They simply weren't worth what they paid for them. -- Now isn't that a lot like what the government is trying to do. We're trying to prop up a bunch of companies with large sums of money when the companies themselves aren't worth anything. The reason they are heading towards bankruptcy is because they aren't worth anything much less the $1 trillion dollars we're going to end up paying.

Do we really want to buy up all the bad debt? Why? Isn't acquiring bad debt the reason these giant corporations are dying? Why don't we actually embrace the capitalistic thing to do and let them die? We want capitalism when it comes to raking in a profit without any hint of so much as making sure the numbers add up. But, when it comes to losses we're suppose to socialize them? No, we shouldn't. Let the Earthquake happen.

We shouldn't be risking the solvency of the United States government in order to prop up corporations which cost more than they are worth. We're ten trillion dollars in debt and we're suppose to dig ourselves another trillion with war and another trillion with bailouts. The Chinese should stop lending us money. We're a bad investment at this point. We should ignore the corporations and focus on saving the people. We need to make sure they have a roof over their head, food so they don't starve, opportunities in life and a modicum of privacy. We should save the least among us, not the richest. We should, like Joe Blow, walk away from trying to fight the untamable monster of bad debt and simply focus on the Joe Blows of society.

We're making the same mistakes the companies are by letting this debt move up the ladder from bad debtors, to bad lenders, to bad lender conglomerates, to bad business propped up by bad lender conglomerates and trying to fight this with bad government policy. There is an old saying, the solution to pollution is dilution. If we just put enough bad stuff in a large enough area we'll be okay. It'll get to low enough levels that we'll be perfectly fine. In practice, this works fine until it doesn't. There's a point where the toxic contamination just like the toxic debt is enough to overwhelm the entire system and cause it all to come tumbling down with far worse consequences than it would have been if we just cut our losses and dealt with the problems head on.

1 trillion dollars is $3000 dollars from every man woman and child in the United States. In reality, you can live on about $1200 a year if you're mindbogglingly poor and covering all your very basic needs. We can far more easily catch the people with endless welfare checks if need be than we could catch the corporate giants who brought this on themselves. The government will not go broke or collapse saving our own people from starvation, but buying up massive amounts of toxic debt from corporations who spend millions to save themselves billions by using lobbyists to avoid paying taxes.

And while you're at it, legalize pot, living in crappy government housing with crappy government food and crappy government attempts to find you a crappy jobs would be far more tolerable if you were totally high. Ever faced a great depression? Ever faced a great depression on weed?

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