Punchinello’s Chronicles

September 19, 2008

Stocks Rise on News of Bailout Plan

The news today reports that after a long week, Wall Street is optimistic following reports that the government will bail out the entire financial industry. Apparently, “saving the US economy” is SO important, we cannot allow the many banks and securities companies to go broke. The investors are all happy.

Okay, but here’s the problem. We already know that companies like Enron and Worldcom went under due to greed on the part of the investors. A small part of that investment means the individual owners of a few shares of stock. A big part is the investment managers in charge of large-scale block trading.

We then hear that the reason for the bank failures is the executives lending (and making up loan programs) to people who have no business borrowing any money, particularly for a house. Once again, to keep the stock values high, bankers have catered to the investors — those fund managers — who don’t really care about the underlying realities of the company.

Banking executives have been greedy, making loans to poor people who ain’t got no money. They’ve also been driven by the knowledge that unless they can keep the stock prices high, “investors” will go somewhere else.

The “investors” (individuals, not the American public) have been greedy, seeing huge dollar signs coming to them after adjustable rate mortgages and balloon mortgages come into effect.

All of a sudden, the bubble is bursting and reality is stepping in. For the first time, fund managers are wondering if maybe they’ll be liable, even criminally liable for mismanagement of funds. They’re looking at the billions of dollars they’ve run through the Monopoly game of life, seeing it all turn to dust.

Of COURSE they’re ecstatic to hear that the government is going to cover all their losses! Wouldn’t you be? What if your credit card company sent you a letter telling you that from now on, you won’t have to pay any minimum balances. The government is going to start paying all your credit card expenses. What if the government told you it’ll take care of your mortgage for you, and if you want to buy a car, feel free to buy whatever you want because that too, will be taken care of.

What’s happened today is a license to steal from the American public, and to raid the US treasury.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.

“Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.”

Although attributed to Alexander Tytler or perhaps Benjamin Disraeli, the quote (although old) is apparently unverified as to author (see Loren Collins, “The Truth about Tytler”).

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1 Comment »

  1. […] Original post by Punchinello […]

    Pingback by Stocks Rise on News of Bailout Plan · Real-Estate-Investing.ExplainedOnline.Net — September 19, 2008 @ 4:52 pm | Reply


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