Exclusive to STR
September 16, 2008
Question: What should you do when your good friend parties too hard one night, downs more alcohol than is thought humanly possible, generally makes a reckless ass of himself in his inebriation, and wakes up the following morning with a hellish hangover and confused guilt over what transpired before?
Solution: you let them sit it out and suffer.
That’s right; you let them face the consequences of their actions. Assuming your friend is (or should be) a mature adult, he cannot expect a savior on a white horse to deliver him from his foolishness. Your friend would be doing you a disservice by having you make excuses for him, and certainly it’d be cruel to expect you to foot the bill for the damage he’s done. Enabling your friend’s behavior wouldn’t spur him to learn from his mistakes and prevent another fiasco in the future.
So when the question arises of what to do about the credit crisis and the failing banks and subprime mortgage-holders, et cetera, there’s only one sane answer: “let ’em fail.”
That’s right; let the housing bubble burst, let the big banks fail, let the big mortgage holders go bankrupt, let the corporate bankers flail around in mud, let the dollar and euro crash, let the stocks fall, let the house of cards tumble!
If this sounds cruel, it’s only in proportion to the cruelty unleashed upon the rest of us by the ruthless big bankers and Treasury dunces and economic “wizards” and government pigs-in-suits. These scumbags, ignorant and defiant of economics and common sense, have pursued policies that are the equivalent of some
And more important, why did it happen in the first place?
There’s this thing called “moral hazard.” It’s what happens when a person or a company makes less-than-sound economic decisions while thinking (wrongly) that there’s little to no risk involved. Believing (often correctly) that they will probably be bailed out anyway, one continues making these unsound choices--and why not? They’re never in a position where they have to face the consequences.
This moral hazard is exacerbated in the case of agents (lenders and credit card companies and the real estate industry come to mind) who have more information and power at their disposal than folks, like us, who deal with them. The agents have less incentive to act responsibly on our behalf and thus take irrational risks that wouldn’t pay off in a freer, laissez faire system--and why not? When there’s free money and easy credit available from the Fed, rational economic risks pose no limits!
Here’s the raw truth: The growth we’ve seen over the past few decades wasn’t real! This economic crisis is akin to a balloon that bursts because you blow too much hot air into it. Pretty much all of us--consumer, homeowner, businessperson, and government official alike--have been making bad choices and bad economic decisions. These all started to add up over time. Consumers and businesspeople and investors lost confidence. Some started holding back while others kept steaming ahead. That mysterious entity we call “the economy” or “the market” is really the sum total of countless transactions and trends in which we all play a part. There is no conspiracy; the economic “crisis” functions as an unfortunate but necessary correction of all the gluttony we’ve partaken until now.
Don’t act so shocked. The system was bound to crack sooner or later.
The excess we’ve enjoyed with our little plastic cards is just a small reflection of the kinds of excesses the government and the bankers and the military-industrial complex have been enjoying for even longer. Our debt mirrors their deficits; our moral hazard mirrors their moral hazard.
Following their example, we too went into debt in order to live it up, even though real wages weren’t rising and inflation was booming. Meanwhile, the government was busy offering fun imperialistic wars, futile “feel-good” social programs, generous corporate handouts and subsidies, taxpayer-funded disaster insurance for people silly enough to build in oft-flooded swampland, the occasional bailout, and easy credit. When they needed to pay for it all, they just printed tons of Monopoly money (whoops, I meant, “greenbacks” although with all these new colorful designs, they might as well resemble Monopoly money). And of course this money was backed not by gold but by “the full faith and credit of the
Moral hazard, hopes and dreams, pigs feeding at the slop trough. “Reap what you sow” indeed.
What’s worse yet is that those of us who were acting responsibly, saving and investing in homes or education or life insurance and such, have to foot the bill for our neighbors who weren’t acting responsibly. Oh yes, I don’t merely blame the government and the corporations, I also have to blame the folks--you know who you are--who didn’t bother to learn a thing or two about fiscal responsibility. They were perfect fodder for the malevolent forces and shysters around them, and they too helped contribute to this disaster.
The party’s over, folks. The hangover has come. Don’t start blaming the free market because we don’t really have one. Don’t beg for government reform because it’s not going to happen. Bailouts and takeovers, playing with interest rates, legislation and regulations (which will be ignored for a price anyway), aren’t going to fix things. What we really need is to start on a clean slate. So let the correction ensue; “let ‘em fail.” Let them all crash and burn. Let the fire purify all and start anew. Let the house of cards tumble. It’s the only way to return to some semblance of economic sanity and security.
Marcel Votlucka is a writer and freelance journalist from Queens, NY. He is a graduate of Stony Brook University, and is a frequent contributor to the Stony Brook Press and the Stony Brook Independent. He is currently finishing work a novella, Neverland: Voices From the Muslim Holocaust.