I thought it was extremely important that I talk about this since the Senate just passed a version of the Wall Street Bailout bill. I think this is so wrong and most American's agree that it is wrong, but yet again politicians ignore it.

I really can't get over the media either. They're pushing this as hard as they can and I really think there is some sort of agenda. I enjoy watching CNBC and I've found myself getting very sick of all the commentary of people on there wanting the bailout. I guess it just shows you that the real capitalists are dead and investors are looking for their version of welfare.

I'm going to tell you why the Wall Street bailout is wrong and I'm going to talk to you about the ideals of capitalism.

Capitalism is a system that isn't designed to be a perfect machine that produces the the best results all the time. It is a machine that does run efficiently and good though. What is happening with the Federal government is an attack on capitalism because there is one vital aspect that they don't get...

Market Justice

Capitalism has a thing called failure built in. Businesses are allowed to fail, it's how the system works. Fanny, Freddy, Bear Stearns, etc all made bad and risky business decisions. They gave mortgages to people that make $40k/year to buy a house that is half a million dollars. It was extremely risky and they assumed if someone defaulted, the house would be still worth half a million dollars, so there really wasn't risk.

Well, they're wrong.

Suddenly now the politicians want to bail out these people's bad decisions. Of course the government will bail them out and they'll blame capitalism as the problem. Yet, they don't allow capitalism to fully work. You can't reward businesses for making bad decisions. That's not how justice works.

What does the bailout do?

All the bailout will do is buy those bad assets from these businesses, so they can take it off their books. Now they'll be healthy (for making a bad decision) and get to continue on profiting.

Tax payers will have to foot the bill and the risk.

The Real Capitalist Solution

The real solution is bankruptcy. Bankruptcy is just the bailout bill without rewarding these businesses and without spending a cent of tax payers money. Bankruptcy court will breakdown the assets and they'll be sold off in auction to responsible businesses.

That's how you fix the mess; you let capitalism finish the job.


Posted by Christopher | 10:30 PM | , | 0 comments »