A quick word on bailouts from a man at rest.
A friend of mine died recently. He was rushing home from work; it was dark and rainy outside and we know he was arguing with his broker on his iPhone. It seems he was going too fast—80 or 90 miles per hour—and his Hummer began to hydroplane. At that speed, we think he just drifted off the side of the straightaway and hurtled into a stand of trees. He had always said he would like to die a natural death, but numerous stress fractures led to complications at the hospital. Finally, he had a stroke related to his injuries.
In my sad work of going through his files and papers, I came across this essay, which, although it concerns last fall’s bank bailout, seems eerily pertinent to the speedy passage of the American Recovery and Reinvestment Act. Congress approved the stimulus package Friday and President Obama is eager to sign the bill this Tuesday.
I am sure my dear departed friend would be pleased to have his essay published, but, since he was a private man, I am equally sure that he would prefer not to have his name made public. Please read this essay from a man now passed concerning a moment and a bill now passed, but consider all three in light of the pressing now...
I may be a little slow, but can someone explain to me the anger at the bipartisan defeat of the Wall Street bailout bill? All those House members did was ask a few simple questions, to which Hank Paulson and Wall Street replied, “It’s complicated.” If anything, this meltdown has brought home the simple truth that one ought not to give loans to people who can't pay, nor buy or sell securities backed by mortgages owned by people who can't pay, nor take out loans that you yourself cannot pay. These are basic, simple, painful, common sense truths. And yet, here we are.
With respect to the bailout, we ought to recall another simple truth: people will continue to do irresponsible but self- enriching things if those things do not have repercussions. Bailing out a boat whose crew wants to take on water so they can bottle and sell it will not stop that boat's crew from taking on more water. Now, the savvy will say that the complexities of the system do not allow for folksy wisdom of this sort. On the contrary, I must point out that this folk wisdom has been crying out in the wilderness for some time now regarding the sub prime mortgage game: "Stop giving money to people who won't repay it. Stop selling bad securities." Perhaps the greatest folk hero was Cassandra -- but only in tragedies, and America ought to remain a comedy.
As to the panic and anger over the bailout bill’s defeat, a few other, ancient simple truths might apply: net worth is of great concern to the old because they need money to survive. Retirement, medicine, the dying embers of self-reliance, one’s temporal proximity to a slow and hospitalized death -- all this costs money, and costs it soon. To the young, however, the possibility of waiting out the current crisis does not seem all that terrifying. They have no intention of liquidating their property and 401k pension for a great many years. Life might get a little more difficult for a time -- but then, they are young. They've got time. The old are upset, and the young are very upset with the old concerning this bailout.
With all due respect to older readers, the aged population of the US rejects the old saying, “don’t put off till tomorrow, what you can do today”. The wealthiest demographic in the world’s wealthiest country, the Baby Boomer generation, can take a financial hit today. Instead, they are quite willing to saddle the younger generations with an additional trillion dollars in debt in order to quickly stabilize their financial wellbeing.
For myself, I would be honored to have my "destitute" parents, if they were to watch their 401k and home equity reduced by a third, live with my young family and me. But then, as folk wisdom would have it, I am young and do not concern myself with pain because time has not yet "flattened a man" my age. Numerous demographers, politicos, and economists have made much of the decline and aging of the peoples of the developed world; but few have analyzed the nature of political decision-making in a polity whose voting block consumes an alarming amount of Metamucil.
Again, the savvy will say that I do not know what I am talking about, whereas they do thanks to their very recent crash course in the arcane workings of the market, led tenderly “by the nose as asses are” on the advice of the very crew who have the most to gain from the bailout of the ship. But do the savvy really know more about the crash than I do about the folk wisdom that has been a constant companion and guide for the lives of many happy, free people.
Another bit of folk wisdom counsels charity in all things. Maybe this is the best course. Maybe the bailout is the only way to save the financial markets of Wall Street, and perhaps the world, from chaos and collapse. Maybe Wall Street is counseling everyone to do precisely what is in the common interest.
But even if that were the case, it seems that (1) moving forward with the effective socialization of a large share of the financial system, (2) putting the US government in what is said to be “only” 700 billion more dollars of debt, “at most,” (Secretary of the Treasury Hank Paulson), and (3) quickly drafting momentous legislation in the pressure-cooker of a presidential election cycle—doing all this seems, according to another bit of folk wisdom, imprudent. After all, haste makes waste. And lest we forget, it was the tyrant Macbeth who said “if it were done, when ‘tis done, then ‘twere well it were done quickly.” But again, I could be wrong. I am a little slow.
Folk wisdom also tells us that nothing in life is free, that life comes at you fast, that talk is cheap and that you don’t solve problems -- even big financial ones -- lying in bed. But since economists keep telling us they do not know how far or deep this crisis goes, I think the US ought to hesitate and deliberate for a long while before adopting a particular piece of hasty political decision-making presenting itself as a 700 billion dollar cake walk.
Cool off, America. Slow down, Paulson. And bravo to those simple, slow statesmen who remembered the old saying: “A handful of patience is worth a bushel of brains.”
Matthew Mehan is US Contributing Editor for MercatorNet.