To Bailout or Not to Bailout, That is the Recession.

My fellow Americans...What the hell is going on? We have a bailout, we don't have a bailout, democrats approve, republicans disapprove, cats living together with dogs...well, as the kids like to text...WTF? I wanted to write about this after this whole thing went kaboom on Monday, and Wall Street went down like a John Denver Cessna flight, but I just couldn't wrap my head around the whole situation. So, I took some time, did some research and am now prepared to give the Elephant-vs-Jackass assessment of the situation. Let me preface this however by admitting that I have not read all 100 plus pages of the bailout proposal - outside of Harry Potter books and steamy romance novels, I simply refuse to read anything over 20 pages if I'm not getting paid.

Let me start by saying that President Bush needs to quit it with all this fire and brimstone, gloom and doom, stuff. The sky is not falling, pigs have yet learned to fly, and I'm pretty sure hell doesn't need a Zamboni. Panic and exaggeration only compact the problem at hand, and unfortunately, many of us, including our congressmen and women, have fallen for this "the world's going to explode" ideology. Yes, we have a hefty sized problem on a wet paper plate, but lets keep things in perspective. We absolutely need to pass some kind of rescue plan, but it needs to be done intelligently. Rushing to a solution just to have one, doesn't mean it's a good one. This decision will impact our nation for many years to come, so it makes sense that if we need a couple days do get it right, rather than just get it done, so be it. It can't be delayed for months and months, as the credit markets are getting pretty chilly, but I think most Americans are willing to hold off for a week on getting that loan for a KIA, if it means they won't be raped and pillaged by the government for the next 5 years.

Enjoy this, because it doesn't happen often - I actually applaud the Republicans on this for not passing the bailout deal as it stood. Even if there were slimy political motives behind it, it was the right conclusion...that bill was crap on a stick. Of course credit goes to those Democrats as well who went against their party to fight for something better for Joe Farmer and Suzy Salesclerk. I especially want to give credit to Dennis Kucinich, who opposed the bill. If there is a single person in Washington that does more to fight for the average American, and bring some accountability and integrity to the Hill, I certainly haven't identified them. Mr. Kucinich gave one of the most rational, non-political assessments of the deal that I have heard, so Dennis, even if you believe in UFO's and can hide entire cities in your coat pockets, you're ok in my book.

On the reverse side of this, there are many people that should be stoned for this debacle. First of all, will somebody please tell Nancy Pelosi when it is and when it is not a good time to infuse politics in to the crucial decision making that needs to be done on behalf of the entire country. If you missed Pelosi's speech, let me paraphrase: "Before we vote, I want to point out that we are in this mess because of all of you right wing jerkoffs and your shit for brains ideology. Now vote with me to pass this bill." Thankfully Ms. Pelosi's idiocy was matched by a large portion of Republican representatives who had their feelings hurt by the Speaker's tender and thoughtful speech. And once again, the best interests of you and me and Bobby McGee, were thrown out that big metaphorical window so our representatives could play Red guy Vs. Blue guy.

Looking for more idiots to get pissed off at? I offer up the ancient soul of one Senator John McCain. Thank God he called off his campaign to save the world by pushing through this important bailout - and then called his campaign back on because he was confident he had saved the day and got his fellow Republicans on board with the bill - and then blamed Barack Obama for doing nothing as the bill failed to pass - trying to hide the point that his help...well, it didn't help. If this is the kind of cool, rational thinking and leadership we can expect from a McCain presidency, we might as well just have Sarah Palin running the country, so at least we can have something to laugh at.

So, now for the bailout and what I think is wrong with it. This Bailout has several faults. To begin with, it doesn't really address the mortgage crisis. You can pump money back into these huge banks and investment firms forever, but until we find ways to keep people in their homes, we're not going to get rid of this problem. There are tons of ideas from economists on how to do this, and I'll try to get to those in the next few days. Also, from what I can tell, the bill will limit annual salaries for CEO's of these companies to $500,000 - but I haven't yet seen anything that limits their multi-million bonuses...hopefully I just missed that part in my skim through. I think both Senators Obama and McCain are correct in requesting the FDIC to raise their insured level from $100,000 to $250,000. Frankly this rate should have been adjusted long ago because of this crazy little thing called inflation. Now might be a good time to insure the American people that a larger portion of their funds are safe, don't you think? But basically their is one fundamental problem that kind of umbrellas the whole issue...

Bailout 2.0 simply continues the same same trickle down economics that helped push as in to this losing affair. Let's buy up all these toxic investments and give the money to these companies that screwed over the country on their greed, and expect that they will do better, consumers will gain confidence, money will flow freely from the well, and trickle down onto the peons of the country(yes, that pun was intentional). Really? That's like a parent saying, "Billy, you really have to stop punching your little brother in the face, he doesn't like it, but you know what, why don't you go ahead and punch him in the face again, and maybe he'll bleed less this time...he needs to toughen up." We have to have Mom and Dad sticking up for the little brother in this situation. We can't just give the same few powerful, wealthy people more money after they mess up, and expect them to make better decisions with it the second time around. This plan gives no significant reason for this to not happen again in the future, and that is the main problem.

The Lemonade Stand Version of the Bailout
I like to think of this plan in terms of a lemonade stand. Picture this. A couple of kids have these lemonade stands set up in their neighborhood and are doing really well for themselves. Their raking in a couple bucks a day with their high quality lemonade from fresh squeezed lemons. They then find an opportunity to buy a crappy lemonade mixture from their buddy down the street for less, and still sell it off for more. The kids start pulling in even more money. Then they find out another kid in the neighborhood is simply pissing in cups and calling it lemonade. They decide to buy up his piss in a cup, and sell that off too. Now, the kids are taking in more money then they know what to do with. These kids just start filling cup after cup with piss lemonade, because hey, nobody's watching them. Then - a problem hits. The first customers start to realize that they aren't getting fresh squeezed lemonade, and realize they just purchased shitty lemonade mixture. Then it gets even worse when other people realize that they just bought and drank piss, for the price of fresh squeezed lemonade. And these kids now have all the money they earned tied up in all this shitty lemonade mixture and piss - but now nobody wants any of their toxic lemonade, and they are forced to shut down. But then, the parents decide they need to step in, and they say, "This is no good. This neighborhood needs its lemonade stands. You know what kids, we've got a plan. We're going to buy up all of your shitty lemonade and piss with this money we collected from every person in the neighborhood. You can take that money and start your lemonade stand back up, and we'll trust that you'll go back to selling fresh-squeezed lemonade, rather than urine in a cup. People will start buying lemonade again, and everything will be great. And the best part is, we'll hold on to your old shitty lemonade and piss for a while, and then we'll try to sell it off for a profit, and pay everyone in the neighborhood back. Then we can all live happily ever after."

I guess to sum things up in a tidy little package, there is more that is wrong with this bailout than is right. While I despise the fact that politics is preventing progress in Washington, I'm glad they're at least going to try and make some improvements. Unfortunately, I can't help but feel that we are setting ourselves up to purchase a 700 billion dollar band-aid. And once again, Wall Street will walk off jovially into the sunset with pockets full of money, and you'll be stuck helping the government buy their piss.