Searching for an Honest Man

I'm disappointed. I should have expected Congress to do the usual self-serving action, like they did. But I had hoped the Senate would follow the road of the House and defeat this bill.

It isn't needed. It doesn't bail out "Main Street". It only bails out Wall Street. Let these banks fail. Let these companies declare bankruptcy. It's the natural order of business. Those that make mistakes and take risks, are either rewarded or penalized for them.

These companies wouldn't just simply disappear. They'd be absorbed by companies that didn't take the risks or make the mistakes. It's economic evolution. Only the strong survive.

Would it affect our economy? Possibly. But, did you know that our economy is still growing? (Link)

• 2nd quarter 2008: +2.8 percent
• 1st quarter 2008: +0.9 percent

Yes, it is a bit weak, but it is still growing. Compare this to the Great Depression (which many of our current politicians are comparing this to). Economic output in 1932 had dropped 45% and unemployment was 26%. In the present day, economic output is actually up, and unemployment, while a bit up, is only 6%.

But, instead of doing something for the common good of the common man... Congress instead went ahead and did what was best for Congress and the companies who lobby Congress.

What should have Congress and the House did instead? Well, instead of bailing out companies that made mistakes and took risks (and are doomed to repeat those same mistakes since they know they'll be bailed out now), Congress and the House could have moved to help "Mainstreet".

Helping people who are struggling with sub-prime mortgages and are in danger of being foreclosed on would have shored up the roots of the overall problem. Sub-prime mortgages and the banks and companies who invested in Mortgage Based Securities are at the root of this current "crisis".

Instead of bailing out the companies, how about bailing out the people? Yeah, a lot of these people probably shouldn't have been given a mortgage, but by bailing them out, it would strengthen everybody directly affected by the MBS melt-down.

By providing tax breaks, deductions, and whatever else that would help these people get back on their feet, would create a domino effect.

How? Well, to put it simply, providing relief to these people would help inject instant liquidity into the markets. A foreclosed home has less value then a regular home. By reducing the foreclosure rate, the values of homes would not decrease, and would possibly remain stable, which would allow a lot of people a chance to refinance into a more stable mortgage. This would help shore up the balance sheets of a lot of banks and companies, and give them time to sort out the MBS mess. Two simple regulatory tweaks would also help towards this. Suspending "mark-to-market" accounting rules and a temporary easing of capital requirements would have shored up balance sheets.

But wouldn't bailing out the common man teach the same lesson as bailing out Wallstreet? Meaning, people would expect to be bailed out? Possibly. But the government would have to stipulate that the bail-out was a one-time deal.

Also, even though the bail-out would primarily help those with sub-prime mortgages, the chances of these people still going into foreclosure would still be high. But, economic evolution would still be in affect, and survival of the fittest would cull out those who aren't responsible enough for a mortgage, and those that should have never been given a mortgage to begin with.

Anyways, none of that has happened, nor will it happen.

As such, the title of this post. "In Search of an Honest Man."

I am quickly becoming a fan of Diogenes because of the above mess our Government has / is creating.

Diogenes wandered around ancient Greece with lantern searching for an honest man (or woman). What most people don't know is why he went searching for an honest man when he believed, as a Cynic, that there was no such person.

Diogenese was witty, rude, and had little respect for authority. For example, when Alexander the Great rode down to visit Diogenes in his barrel (yes, he lived in a barrel), he offered Diogenes any gift of his choice. With a scowl, Diogenes snapped back his response: "What you've taken away, you can never give me.

"Huh?" said Alexander

"You're standing in my sun."

I am fast approaching the same conclusion. Our Government is taking away something I don't think they can ever give me again. Hope.

There is no such thing as an honest man.

Now, excuse me while I retire to into my barrel.