Big news at CNN today is the announcement of a “several hundred billion dollar” bank bailout that will “attempt” to get financial institutions back on their feet. If you have been living under a rock for the past two years, the story is: banks were giving out sub-prime loans to people for housing purchases. These people defaulted on their loans in mass leaving the banks with property that wasn’t worth the loan and out the money. This spurred a lack of confidence in investors who would not continue to support the loans forcing the banks to stop giving loans. If the bank isn’t giving out loans, people aren’t buying homes. When people aren’t buying homes, our economy (apparently) tanks.

In response to this, there is plans being put down that will attempt to “bail out” the banks by having the government absorb some or all of the debts of these banks: amounting in hundreds of billions of dollars (apparently).

This is bad… here’s why:

1. History repeats itself

I know its common for bloggers to leave the biggest reason for last, but I am breaking the mold and starting with it first.

These banks got themselves into this issue once. If we bail them out, what is to prevent them from doing this again? There are no laws in place… why should I, now being the investor, have any faith that they will make good on this loan that I am giving them (that they don’t really have to pay back)?

I, as a taxpayer, feel that this is wasted money. This is money that will go to attempt to fix a system we barely understand, with no assurances that it will even fix the problem. Not to mention, it adds an enormous amount to our already large national debts.

Makes a bad situation worse.

2. Let the market sort is out

The government, when talking about a lot of issues that are cornerstone to our economy (the Internet, for one) loves to use the old adage that “the market will take care of itself”. Why are they not taking that stance here? A couple of banks will tank, yes… but that’s what they get. Our economy may suffer, yes… but it will likely be made stronger by tanking the banks that were causing it to spiral downward in the first place.

The capitalist market has a lot of flaws, but I think where it can usually succeed well is that if you are up to no good and try to undermine it, you will suffer one day or another. Here is no exception: you fuck with the market, the market will fuck with you.

I say: let the banks rot, fuck em… that’s why.

3. What exactly are we buying?

Maybe its not a reason, and instead a question, but what really are we buying? And don’t give me this shit about “piece of mind” and “market stability”. No one knows exactly how our market works because it just does its own thing. Its based on consumer opinion which is an ever shifting target. So, I ask, what exactly does my money buy me?

For my part, it just seems like I am buying a ticket to this exact same situation in another 10-15 years. This is like putting a band-aid on a cut that needs stitches; it will work for a very short time but in the end the problem is going to pop up and its going to be worse.

4. The loanees are at fault as well

People, seek sound financial advice, for christ’s sake. If you make $30k a year and your loan will require you to make $35k a year, you DO NOT TAKE THE LOAN. I know this is a hard concept for people to understand, but try to stay with me.

If someone loans you $5 and says that for every day you don’t pay them back they are going to add $1 to the amount you owe, but you only make $.50 a day, how soon can you pay them back? Hint: it rhymes with schmever. Eventually your debt is so deep that you owe more on the loan then the item is worth and, thus, default(the bank makes no money and is now stuck with property that it can’t recover the cash on – see how the avalanche begins?). Same concept applies with your housing loan: if you can’t afford your house, you can’t afford it. Don’t take the loan.

Now, obviously its a day-late and a dollar-short on this advice, but perhaps we, as people, can be a little smarter in the future.

5. Problems lay deeper then real estate

The problems that plague our economy are much, MUCH deeper than just in the real estate market. Our economy is plagued with out-sourcing issues, growing unemployment, bad business decisions, corporate tax evasion… the list goes on.

You are going to fix the consequence to the problem without fixing the problem itself. Going back to my wound example: you are cleaning the blood without stopping the source of the blood flow. When Katrina hit New Orleans did we mop up the water and just leave things the way they were? No. We fixed the problem (or at least most of them) with the levees.

Take some advice from someone who knows a thing or two about… well about anything. In fact, if you are alive you probably know this: fix problems at the source, not at the output. Fix the tax issues that plague the country, restore faith in American workers, curb out-sourcing with tariffs and such… get Americans to invest in THIS country, not any other (China, India, etc).

Conclusion

Fuck the conclusion, you get the gist.