Monday, December 22, 2008

Bailouts, Capitalism and the Economy

Update: Oddly appropriate CNN article

Part one of a three part series.

I'm so tired of hearing these words as they come buzzing out of the mouths of every pundit, journalist and politician that I'm pretty sure they cause me physical illness. It wasn't the bbq nachos after all.

Yet, I haven't clearly stated my case on all of these issues, so here goes just in time for Christmas. I got you something after all.

Bailouts are a gigantic waste of our money.

I think this is obvious to everyone but the slimy politicians who vote for them because they can't stand to see their buddies lose their million dollar homes in West Palm.

If a financial institution isn't making money and isn't smart enough to put reserves away for times of trouble and acted fiscally irresponsible by giving out 110% loans to waiters for million dollar homes in the middle of crack riddled neighborhoods, then what makes you think they'll be smart enough to change their ways and be able to pay all of that money back?

Delaying the inevitable and pissing away billions of dollars all at the same time. This is what our politicians are good for.

The argument was that if they didn't set up this slush fund for banks to draw from, then credit would seize up and suddenly you won't be able to buy anything. Stores wouldn't be stocked with plasma TVs and we'd all die or something like that.

All of it, bullshit. Yes, companies that don't deserve to exist because they lose tons of money on a monthly basis and rely on an ever flowing line of credit to survive would shut down. But companies that operate the way their supposed to, i.e. make more money then they spend, would survive just fine. There may be a small short term cash flow squeeze, but they would get by.

And I'm sorry, but are you telling me that someone, some bank or some country wouldn't recognize an opportunity to loan a bunch of money because everyone else is frozen and come in and offer some credit? Bah.

The truth is that politicians and fat cat bankers are so tied into each other that they can't afford to see each other fail.

There are several reasons why they government acted so quickly to bail out Wall Street.

1. 700 Billion dollars is not that much to politicians. Three weeks before they passed the bailout legislation they passed a 630 Billion dollar spending bill that would finance the government between Oct. 1, 2008 - Sept 1, 2009. Or at leas part of that time. I believe it actually only represents 60% of the money that will be spent during that time, so really from Oct. 1, 2008 - June 1, 2009. What's another 700 billion when you already owe trillions?

2. Too many other countries own stakes in these banks and financial institutions to let them fail. This would mean that they'd be really pissed at us and could stop loaning us money.

3. Politician's best friends are wealthy people who don't want to see their money go up in
smoke. People with $100,000 or less were protected by the FDIC and probably weren't calling up the politicians complaining. But I guarantee you the wealthy people they see at cocktail dinners and fundraisers were calling like crazy. Most of the politicians themselves would have probably seen significant losses if they had let them fail.

I know, conspiracy theory. Let me ask you what's the difference between an auto industry bailout and a bailout of AIG? Why was saving AIG, Lehman and other's so damn important that we had the President begging for money on a daily basis while it's ok to publicly humiliate auto makers who are asking for 1/10th of the amount of money? Friends in high places make all of the difference.

For the record, I'm opposed to bailing out the automakers as well, but I think it's unfair the way they were treated in comparison with the free pass we gave Wall Street.

The impacts from not bailing out everyone would have been bad, no doubt. However, there were alternatives that were much better and would have dealt with the underlying fiscal problems instead of placing a band aid on the gunshot wound.

If you think this was the last bailout, you're wrong. This was just the first.
That took longer than I thought. I guess Capitalism will be next time.

Merry Christmas!

Wednesday, December 17, 2008

Volunteer Work and the Holidays

I tend to be a negative person. I generally focus on the bad things that people do and this causes me to distrust people as a whole. I'm not real sympathetic (I'm trying to work on that) and I'm fairly convinced that I'm an asshole. I'm not sure if I would like me if I were someone else because of my "bad attitude".

Yet despite all of my short-comings, I do volunteer work. I've spent the last few months helping with United Way and the Oxford Christmas Store and I keep asking myself why.

I enjoy complaining about things, but surely my fetish for bitching isn't enough to drive me to help others.

I realized while speaking with my dad the other night that there are two main reasons why I do charity work.

1. I have trouble saying no. In most cases, some bleeding heart liberal or excruciating nice person has asked me to help out with a project or take on some sort of responsibility. "Sure," I say all the while thinking about how big of a pain in the ass the entire thing is going to be for me. I don't typically say no because I don't like to disappoint people and because my ego prevents me from admitting that I may not be able to do anything and everything. Understanding your psychological triggers doesn't necessarily mean you can control them.

So I say yes when people ask me to help or donate or whatever, and the next thing I know I'm walking around Wal-Mart for 2 hours after work buying toys for needy children.

2. Deep deep deep deep down, there is an optimist in me that believes that these little acts actually help people have better lives. That "Yes Virginia there is a Santa Claus" and that despite how silly or small I think things are; some things have a huge positive impact on people's lives. Cosmic Karma. A stone thrown into a still lake with ripples extending out to shore. Incredibly some small part of me still believes in all of that Campbell's bullshit for the soul. I blame my parents.

So it's the holiday season and I've been doing some reflecting. This economy, which I keep neglecting to write about but really need to, sucks. People are having trouble unlike any type of trouble they've seen in a long time and I'm going to tell you why you should help and how.

I've learned after a long Saturday of passing out toys a couple of things that I had forgotten.

People that need help aren't just people living in boxes or people on milk cartons. Sadly, it's people we see and interact with every day that probably could use a little something extra this season. It's people that we assume are ok because they don't have dirty baggy clothes, a cup and a sign that says "need money for beer". The reality is that teachers, waitresses, cashiers and many others are most likely barely getting by or slowly falling behind financially in life.

I've also remembered that my problems are petty compared to the issues that these people have to face.

True story. A woman was recently helped out by a very generous group of people from my company. She received a small pile of toys and clothes for her kids and when she saw it all, she started crying. Her kids had been asking when they were going to get a Christmas tree, but she had been putting it off. Not necessarily because she couldn't come up with the twenty bucks to buy one, but because she couldn't afford to put anything underneath it.

I think about this and the things that I worry about in my life and I realize that I need to be more grateful.

How do you help? There are a lot of ways beyond volunteering or doing an angel tree, but obviously all of those are great options. Leave an extra big tip one day at lunch. In Oxford you can call Interfaith Compassion Ministries and give them a donation. You can support the Christmas Store here

Doesn't really matter, just do something extra. Which brings me to my last point for the cynics who are thinking of kicking me out of the club. The hardest lesson of giving is to learn not to wrap your gifts in expectations. A gift is a gift and once given no longer belongs to you. It could be used for good or it could be seemingly wasted, but this is all part of it. You might end up buying some alcoholic one more drink instead of a turkey dinner. That sucks, but in a weird way has helped make the world a better place. Don't worry about the bastard coated bastards with bastard filling. It's worth getting them drunk if it means some kids end up with a Christmas tree and gifts underneath.