Bail Out:

Now comes the reckoning. America has sown the wind and reaped a whirl wind. And the truly astounding part is every one is surprised. Or everyone acts surprised in any event. Let us recount what America has done over the past say 30 years.

We saw in 1973 oil prices jump from $3 a barrel to $8 a barrel and the oil producing nations stitched together a cartel to market their product. America should have had the sense to realize that oil cartels were exactly why Teddy Roosevelt directed the department of justice to break up Standard Oil of New Jersey. And that was quite a few years ago. Oil is what America’s economy is based upon.

One of the reasons why Teddy did as he did was so that no one oil company could dominate and set the price for crude oil. The world is not however governed by American law. So guess what; it is not illegal to operate a cartel anywhere but in America. Does that put us at a competitive disadvantage? Some would say it does. Domestic cartels are still not permitted, though more and more American businesses are merging to the peril of the American consumer.

That is not the real failing of America in my judgment. The real failing is we have based our economy on the concept that when it breaks throw it away. Often times some years ago things that broke could be fixed. There were even places where you could take things to be repaired. Cobblers repaired shoes and tailors resized clothes. There were even people who could fix your TV.

Shoes wear out over about the same time period but now they are discarded rather than resoled. That is if they have not gone out of style and were discarded when almost new so that the owner of the shoes could continue to look stylish. This thought process extended to everything. New was always better than old. New car, new TV, new computer and new cell phone. No thought given to where all the old devices went. And so we began to pollute the environment and a whole group of folks sprang up that opposed that. Largely these people were ignored and labeled tree huggers and other terms of derision.

Where the trouble got unmanageable was with very large assets. To most Americans their house/home is their largest asset. But more and more a home became a disposable asset. As your earnings increased you did not fix up your house. You sold it and moved into a bigger and better house. There would always be a market for your old house. And it seemed that there was an endless supply of money to make the purchase with.

Suddenly America found out that loaning money to purchase over priced houses did not make a lot of sense when you were spending $800 a month on gas to drive from your job to your home. No problem because the house is worth less than the mortgage on it so the homeowner can just walk away from his loan right. The homeowner can discard the house like he would a cell phone that was not the right color. Right?

These loans on over priced houses form the core of the current banking problems. That the loans should never have been made in the first place is being ignored. These worthless loans were made in the form of adjustable rate mortgages. Lovingly referred to by those in the know as “sucker loans”. You hook a sucker and then suck them dry. When the person who made the loan tries to declare bankruptcy you block that too. When a lot of these people just flat out tell you they are not going to pay the bank goes under. The difference is the bank can afford lobbyists who go to the government and say if you don’t help us the economy will go in the crapper.

Now the government seems to be listening to these same fine folks who got us in this mess in the first place. By loaning these folks money the government is saying that they can separate the horseshit from the cornmeal after the cornbread is baked. I rather think not. Its done its done. Just take $500 from every American citizen and give it to the bankers so their banks can continue to make loans to bad credit risks.

Or you might just remind the bankers that they were the ones that loaned the money in the first place and if the loan goes bad tough titty kitty. Nagh .. far to simple a solution.