Stance on Bailout

Some people have asked me for an actual Stance on the question of the Bailout. I reply that there is a place for Government intervention, but it has limitation, and that has been passed. The Fed action taken in response to Bear Stern, Fannie and Freddie, Lehman Bros., and AIG finished desired Government intervention. There is a Point where the Private Sector must once again assume their Risk and Responsibility. This means that Private money must extend the Cash to get through this Crisis; it is much easier and quicker if no one insists that Government assumes the responibility for the aggregation of the funds, whether by Taxes or Debt. In either Case, the Cash will have to come from the Private Sector. I believe it is far preferable with higher speed to force the Credit industry to offer the premiums to get that Cash, while the high Interest rates will more generally sponsor good Credit practice to greater degree than any Government regulation. I would like to explain to Mortgage holders that their current Contracts present a better deal for them, than any Mortgages established upon future viable economic conditions. At Risk Mortgage holders simply desire retention of contracted Property which their Incomes have proved too expensive, and is a Welfare desire to retain more equity than deserved by Government subsidy.

Government protection of Mortgage holders will simply worsen the Credit management of this Country, and lead to greater Crises in the future. Continuance of old practices which brought the current Crisis will only cause multiple disaster in the future. Billions of Dollars have been lost, and billions more will be lost; but forcing the Credit markets to reform will save Trillions in the long-run. Congress needs to deny a Bailout, or any further Government Cash in any way; this means Treasury and Fed must cease their Firehouse duties. Make the Private Sector raise its own Cash, and allow the Foreclosures to work. Housing prices will decline to their natural level, and the Realtor and Construction industry will face their own decline, at least until they amend to Renovation practices to return equity to the lost Housing. Investment Banks and Investors will have to assume their natural losses coming from their assumption of heavy Risk. The high Interest from Private Sector raised funds will refund more moderate Investors for their more sensible Investment practices, and force Business to adopt more effective Investment schedules.

The whole genus of the Markets today want to return to the vast Profits of past years, but there was never enough Equity to support those Profits, then or Now. Government bailout Cash would only further inflate the Equity price of those assets, without increasing the actual value of that Equity, compounding an already-bad Situation. Real Terms dictate that We squeeze unearned Profits from the Markets, not worsen the current conditions. We need more Liquidity, but it must be a liquidity coming from Blue-Sky Operators losing their Investments in trash in the Past. lgl