Note to Congress: Don’t do it. Don’t bail them out.
Yes, dominoes will topple in the economy. People will blame you, the Congress, when our financial house of cards tumbles. I know you see a bailout as a way to redeem yourselves, to at least stave off the blame. But, guess what? The American people don’t approve of your performance, anyway. Look at it this way: When it comes to Congressional approval ratings, you’ve got nothing to lose. Go ahead and take the blame, and let Fannie Mae and Freddie Mac collapse. Let the marketplace correct itself.
Congress, if you bail out Fannie Mae and Freddie Mac, do you know that it will cost $2 trillion? If you spend $2 trillion, what will it do to the budget deficit? What will it do to the national debt? What items in our Federal budget will be displaced if you commit that much money to Fannie Mae and Freddie Mac? Will it kill our defense budget at a time that we are waging a war on two fronts?
Guess what, Congress? If you bail out Fannie Mae and Freddie Mac, how many more industries will you be bailing out? The message you sent by bailing out Bear Stearns will only be magnified a hundred times when you bail out Fannie Mae and Freddie Mac. How many more Wall Street firms will ask for a bail out? How many more of Bear Stearns ilk? How many more banks? Automakers? Airlines? Will you print more money to cover these trillions of dollars for the bailouts? What will the increase in the money supply mean? A worthless dollar? Inflation that will put prices of household goods beyond the purchasing power of household budgets? Will taxes have no choice but to go up? Or will the interest on the national debt end up consuming more than whatever revenue the Federal government scrape together, and then find our Federal government in default?
When we let Enron go under, there was an economic earthquake in Houston. But guess what? Now, Houston is one of the best places to earn a wage and support a family. When average wages are compared with the cost of living, Houston is tops in the nation for letting people take a crack at the American dream. We let the market correct itself. After the darkness, there will be a new dawn.
Congress, these firms that want to be bailed out engaged in bad behavior. Terrible behavior. Horrendous behavior. They cheated in an attempt to get ahead. They had their day in the sun. Now it’s time to pay the piper. Why should we let good money chase after bad? We shouldn’t. If our taxpayer dollars have to be spent on subsidizing anything (which I don’t think it does) in the private sector, why the worst performers? Why not the best?
Trust capitalism to work out its own kinks. Don’t socialize industries so huge that they’re too big for the Federal government to swallow. The communist nations like the old Soviet Union fell because they let good money chase after bad, shoveling rubles into the money pit of industries that were corrupt, grossly inefficient, and totally lacking in innovation.
It is better for Wall Street to go belly up than for the nation, itself, to go belly up.
So I implore you, Congress, just don’t do it. Don’t.