"It is the common fate of the indolent to see their rights become a prey to the active. The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt." -- JP Curran, 1790

Monday, October 6, 2008

$700B of postive reinforcement, for what?

What did the bailout get us? Time will tell, I guess. I understand the lack of liquidity in the market and its impact on B2B transactions. But didn't we just postively reinforce the bad behavior of the lending children? To use psychological theory, we essentially just rewarded those issuing high-risk loans and those seeking them by saying, "you shouldn't have taken out/issued a loan you couldn't afford to pay, but we've got you covered. Continue over-extending yourself".

Now state governments and more industries are at the steps of the Capital with their hands out. I'm amazed at the lack of coverage of the $25B given to the auto industry last week, apparently to help them develop hybrid cars. Where have market principles gone? Capitalism on the way up because it rewards, Socialism on the way down because it doesn't punish (the culprits anyways). This continued coalescing of power in the Government, while blaming capitalism and free market principles, is a trouble sign of things to come.

I imagine I'm not the only one looking for a 'Galt's Gulch' right now.

Signing off...JCB Sphere: Related Content

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