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8 February 2009 - Have you got the Answers?

I have always felt there is no such thing as a dumb question. There are only dumb people who will not ask the question to learn more about the subject and to get an answer. So today, a couple of questions about the current economy.

Question #1. How can so many, well-paid, supposedly intelligent business people in the banking community, not only in the United States, but all around the planet; how can so many people all make the wrong decisions at the same time? But as we look at the chaos in the financial community around the world today, it has become very obvious that all of these well trained and experienced financial people made some very stupid decisions. I understand many of the choices made were based on greed; but I’ve always maintained that capitalism is based on greed. But, it only works when greed is controlled and it fails when it becomes uncontrolled. So because the world-wide major banks made the wrong decisions, now we are all suffering and paying for it.

There is an interesting foot-note to this situation; most community and rural banks are in much better shape than their big-city cousins because they continued their sound lending practices. I’m sure many rural bankers learned and remembered the hard lessons of the 80's.

Question, #2. With all of the discussion and debate on the economic stimulus plan, I find it interesting to see governors and mayors from all over the country rushing off to Washington, hopefully none of them are flying in corporate jets; but rushing off to Washington to ask for their share of the bail-out money.

Isn’t that admitting on their part they have not done the job they were elected to do? It’s obvious they should have been doing a better job of fiscal responsibility managing the finances of the city or the state. But now, with the smell of free money in the air, they run off to Washington to ask for part of that money, admitting to themselves, I hope, “we did a bad job, so now we’re coming here to get our share of the money.”

And then there’s the 3rd question: Where does the money come from?
We know the answer to that one; it comes from your pocket and mine as taxpayers because sooner or later, we and our children and grandchildren, and probably, our great grandchildren, will pay the bill for the “rescue plan”.

Those are my questions. If you have some answers, I’d love to hear from you.

My thoughts on Samuelson Sez.