How many times, when you were a kid, were you bailed out by your parents after you made a mistake or crossed a line?
My favorite childhood “bailout” took place when I was 16 and working at a local service station. I recklessly backed a tow truck into a garage door. I remember how steamed my boss was when I called him with the news (to top it off, it was the middle of winter). He vowed that because of my carelessness I would pay for every dime of the repair.
That job was my source of precious pocket money, and the prospect of working the rest of the winter and spring for no reason other than to fund a garage door was a total bummer.
Fortunately, my dad came to my rescue and chose to bail me out – he was a skilled carpenter, and he ended up fixing the garage door himself, thus allowing me to continue to earn my pocket money unfettered by debt.
I couldn’t help but think of that incident when I heard about the U.S. Government’s response to the latest crisis in the financial world.
Like me, someone screwed up, this time on a massive scale. Certain investors and lenders took way too much risk on shaky mortgages and investments related to them, and as a result long-standing investment banks and insurance companies collapsed, and the financial markets were staring into the abyss.
And so, the government is proposing a huge bailout, in an effort to give a raft of institutions a clean slate with which to resume their businesses (suitably chastised, we hope).
Capitalists are like children, in that as much as they would like to be left on their own, their tendencies for occasional overreaching and recklessness dictates the setting of boundaries and a reasonable amount of supervision.
Alas, the parent in this case (the government) let things get a little too lax with its children (the capitalists), and thus had to do what parents have to do sometimes – bail the kids out, even though they really didn’t deserve it.
I realize there is a delicate balance in a democracy between letting the free market do its magic, fostering growth, innovation, and prosperity, and putting limitations on its excesses that could unnecessarily stifle those benefits. But sometimes it takes an honest look at human nature to realize that even in a capitalistic society, a little solid and sensible “parenting” can be a really good thing.
I hope that in the wake of these latest events, that sensibility will return, and a few more boundaries will be set to keep the children out of future trouble.
Because even parents have their limits – you can bet my dad had no intention of repeating his garage door bailout if I screwed up again. And our government has only so much taxpayer money to spend before the well goes dry and the walls really come tumbling down on all of us.
So let’s “parent up”, shall we?
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{ 2 comments… read them below or add one }
Terry, While I agree the government needs to step in here, comparing government to a parent does make me a tad uncomfortable. Seems to me the last several years we’ve been relying on government to fix our problems. To me that’s like jumping from the frying pan into the fire. Our government played a big role in creating the financial crisis. Banking regulations are woefully out of date. Important regulations such as the rule against naked short selling were not enforced. Congress encouraged banks to make aggressive mortgage loans in the interest of helping the disadvantaged. We are not children, but too many of us, myself included, have been suicidally complacent. If we, the citizenry, don’t have and share collective wisdom about vital issues such as the workings of our own banking system, how can we elect leaders to properly manage them? I guess what I’m saying is, I’d flip your analogy upside down. We, the voting public, ought to conduct ourselves as parents would and keep those kids running the country in line.
Even at the age of 25, I made a bad choice and had to ask my parents to bail me out by getting a car loan for a used car and let me pay the payments for them because my credit was shot (and they are wisely against co-signing).
Now, we’ve purchased a 30-year fixed rate townhome that was only a few dollars per month more than our rent. We’ve run the numbers, and it is well within suggested percentages of our income.
I can’t help but wonder if we should have bought an old house for 1/2 the price because of all the crap going on, until I realize that, as long as we pay our mortgage, we will keep our house regardless of how many other people default. We live in new construction and are already seeing sale signs up and units built with 5 out of 6 units available. Someone got greedy and didn’t crunch their numbers.
I think we all need a big financial enema and everyone needs to get educated about financial responsibility. If your income is less than outgo, something needs to change. We are taking a financial course to get better educated, and they’ve spent the first 5 weeks talking about tracking everything and getting out of debt. The easiest raise you’ll ever give yourself is not paying money to lenders. When we paid off our credit cards earier this year, BAM!, we had an extra $300/mo without breaking a sweat, and that’s a heck of a lot bigger than my raises were at work.
Good talkin’ to you, Terry.