I just arrived back from a wilderness trip of two nearly two weeks. On my return, I learned that the Bush Administration is hawking a plan to "bailout" multiple financial institutions. I wrote to our representatative, Congresswoman Woolsey, with the following message. If you agree or don't, let's raise this issue of "why a bailout?" before it passes Congress. (go to: https://woolsey.house.gov/)
My letter: I have operated my own small business for over twenty years in the sure and certain knowledge that if I did not undertake the correct actions over the long haul, I would fail, in which case, I would have to close my doors, seek employment, or perhaps, borrow a tin cup in truly dire straits.
Every one of the companies proposed for bailout were headed by senior executives who collectively made wrong-headed business decisions in the interests of short term profits over the past decade or more. These firms paid their senior executives massive bonuses, often totaling in the hundreds of millions of dollars, for undertaking these wrong-headed moves. Many of the practices that landed these companies in hot water appear to me to be criminally fraudulent.
In any event, the parallel in your home and mine, is to tell your teenager that you are awarding them an annual clothing allowance of $800 (for example) and that they may use that money in any way they choose for clothing. If the teenager spends it before, you make clear that they will have to use their personal money for any additional clothing purchases.
Two months later, your teenager comes to you and says, "Oh, Mom, I've spent all $800 and I really need to buy this new pair of $80 jeans." And you then say, "Oh well, OK. I didn't really mean it." Here's the $80 and by the way, anytime you need more, come and see me.
In short, bailing out these companies amounts to a highly irresponsible long-term act. It encourages financial executives to take inappropriate and unsound risks for the seeming short term benefit of their share prices and annual bonuses.
IF you are in favor of bailing out these companies, I'd like to know why, and in detail and pronto. The Bush administration is apparently attempting to rush through legislation authorizing the bailout and I don't seem to hear a single voice saying, "Why?" There seems to be a presumption that the "deed is already done." Will you stand up? Will anyone?