I am really trying hard not to be angry but I can’t help it. It seems that every time I turn on the news, pick up a newspaper or listen to the radio, all I hear about is the government giving out money. Yet for some reason, I never get any.
I am really sick of hearing about the giveaway and, in fact, I am outraged by it. But what causes me more grief is the fact that nobody seems to care. Everyone seems to believe that government in its infinite wisdom can simply dole out dollar after dollar – or should I say taxpayer dollar after taxpayer dollar — to one bank or financial institution after another with little if any regard about actually making things better. It’s as if the top bosses of all of the financial services companies – read banks and brokerages — got together a couple of years ago and said, “Hey, we know how to line our pockets and those of our most-favored employees! We can create, sell and dump worthless financial paper on unsophisticated investors and let the government bail us out when the chickens come home to roost.” Does that sound familiar?
I’m not one for conspiracy theories but I may be by the time all this stuff comes to an end. These bailouts are simply wrong, in my opinion, and frankly I don’t understand why nobody is saying so. Am I the only one who thinks that if companies fail, management should be out of a job and not be rewarded with tax dollars?
Furthermore, the recent news at some of the nation’s largest banks seems to indicate that the bailouts are not working. The old adage about throwing good money after bad is being proven on a daily basis. Please don’t read this and think that I want all the banks and brokerage firms to fail. That isn’t what I am saying at all. I realize the impact that the collapse of some of these businesses could have throughout the world, and I am not that evil.
I am, however, against the idea of continuing to throw money at badly managed businesses. Government bailouts are not going to solve the problems of weak, corrupt and self-serving management teams.
Strong management that is given incentives to run good, tight, successful, money-making operations is what is going to turn this economy around. The White House, Capitol Hill, the Treasury and the Federal Reserve all know that this is the answer. It is time for them to start implementing it. If President Obama really wants to make an impact on this economy, he needs to start by getting rid of the TARP program and working to find better solutions than simply throwing money around. He promised change – hopefully he can deliver.
However, to avoid being called a blowhard like most of the print media poets and talking heads on the cable news channels, I am going to provide President Obama, the soon-to-be Treasury Secretary and anyone else in Washington who might have power to get something done some advice on how to restore confidence to the banking system and to restore order to the equity markets. My suggestions will cost next to nothing and will achieve two very important goals: restore confidence to the banking system and bring order to the equity markets:
1. Increase FDIC insurance from $250,000.00 to $500,000.00
2. Put back the Up-Tick Rule
My suggestions will cost next to nothing to implement and will achieve two very important goals quickly and set us on a course to reverse our current financial situation. Stability will come to the banks as consumers will have a sense of security over their hard earned post tax dollars and the banks deposit base will increase. The Up-Tick Rule will cause the equity markets to be less volatile which in turn will remove the wild gyrations that have occurred over the last six months.
It is our job as citizens to not only demand that our President and our leaders take action but, remember, they’re spending our money, so they should take the right action.
Get outraged. We all work to hard to see our dollars being flushed away in order to bail out corporate mistakes. Get outraged – it is our responsibility.
THINGS THAT DRIVE ME CRAZY!
Last week nothing seemed to drive me crazy and, as I wrote at the end of last week’s post, I didn’t expect that to last very long. Sure enough, I was right. I was having a conversation with someone who fancies himself a financial Wunderkind. This is a guy who used to tell his friends, family and anyone who would listen that he was a hedge fund manager – back when it was en vogue to do so. Now, though, he’s jumped on the anti-hedge fund bandwagon with both feet. Last week he told me that the reason hedge fund managers make money when nobody else does is because of inside information. Need I say more?