BAILOUT REQUIRED THINKING

Commentary #32

September 25, 2008

 

Regardless of whether the decision here in the USA is to throw more money at the current economic crisis or not, there are lessons to be learned here and positions to entrench into psychological iron. First and foremost must come a little common sense in recognizing that allowing the potential for poor behavior without risk of consequences to the offender that fits the offense in just incredibly unwise and down right stupid.

Human behavior in general just does not function well in an unstructured environment where anything goes because the center starts to fall apart just as it has here. As the story goes, long ago a person of renown temporarily left his community for a while and returned with a list of general principles and guidelines to govern human behavior that has come through time to the present. Those principles for human behavior now need to be reaffirmed here in this time and place. Not the least of one of those principles was the need to balance off a focus on the needs and desires of self with a focus on serving the needs of the whole. Only when in balance are both stable.

Less government and deregulation is good in general theory but only if it is backed up by the very real risk of perceived as painful consequences should offenses occur. The Soviet Union as a major world power failed in large part because it followed its self oriented wants, desires and fears over extending itself economically and ultimately into collapse. There was a lesson to be learned there for other major powers but it seems to have flown over too many heads except for some very manipulative self oriented types who may now see major world powers collapse as a good thing for them.

Before 9/11, there were several trillions dollars of surplus that could have been applied to the real total debt promoting the stability of the USA and thereby world markets. Likewise Congress and the Executive branch were finding it hard to limber up spending for fear of voter reactions. After 9/11 public conservation and caution went out the window and the spending flood gates opened wide based on emotional fear stampeding everyone. Further, there is evidence that this may have been by manipulative design.

Yes excessive irresponsible spending was present before 9/11 but it went to an entirely new and incredible level afterwards. Irresponsible political leadership led the way in this and the economic communities dutifully and gleefully followed with the generally clueless public tagging along. There then followed years of gluttony of spending quickly erasing the trillions in surplus and massing up several times that in debt including becoming indebted to countries historically not favorable to this country.

Frankly we were financially broke long ago but no one wanted to face that. When you're that broke (anemic), you are vulnerable to any kind of more serious down turn and the combination of the unexpected Katrina disaster and the mortgage market issue merely revealed what should have been extremely obvious all along to anyone with simple common sense. The scary part is that right before the true crisis began to force its way into mainstream public awareness, our Presidential candidates were all talking about what they were going to do for us requiring spending even more money that was never there. This demonstrates just how clueless they were and they are competing for the highest office in the land. Does that give anyone pause?

We're in the thick of it now but the basic lesson to be learned here is to never enter into a performance contract that does not spell out serious penalties and consequences for failure to perform as expected and agreed. If the risk consequences are serious, then the need to perform will be taken seriously. That applies as well between the American people and its elected officials.

If a financial borrower jumps on more than they can handle, then consequences naturally arise from such poor decision making and an appropriate price must be paid. If a lender fails to properly advise the borrower and/or leads the borrow into more than he or she can handle, then the lender must pay an appropriate price as well. Likewise, if company management (note that I did not limit this to CEO's) leads a company into financial no man's land, then those responsible should have their personal wealth at risk appropriate to the degree of their involvement. It's very simple, consequence ridden behavior breeds consequences.

If a regulatory body is not doing its job and/or in bed with those that they are suppose to be regulating, then it's time to clean house NOW. Also, if an elected official fails to perform as agreed and expected of them, put then out right away and someone else put in until finally someone is found that can and will do the job and no job in the land is too high to be immune from this principle. Likewise, anyone guilty of practicing manipulation on a scale that places the welfare of this country in jeopardy should be treated as treason, a crime against the American people, and punishable as such.

In other words, if the public would insist on aggressive real teeth in regulation via its leaders, then potential offenders would think more than twice about poor behavior, goofing off at public expense, waste, and wrong doing. The perception of real risk by potential offenders is always a good thing. For example, a CEO would think twice about wrong doing if there was any real risk to their personal fortunes. Further, a President and Vice President, if there were real consequences, would think twice about extensive spending of money and lives on useless wars that protect the interest of only a few, all while violating mainstream ethical values.

So you people in leadership, think about it while you are determining what should be done about the current financial crisis. The American people are aggravated because this has gone too far! There is a wave building in the population and you can clearly see it. If you don't want it to turn into a Tsunami sweeping you aside, then make absolutely sure you are doing the right thing. Make absolutely sure that offenders are not being let off the hook and that the financial interests of the innocent American people are protected and come first in your deliberations. Anything less than that is consequence ridden.