Media fence-sitting and doubletalk on the financial bailouts scandal

I had to make a temporary return from my medical hiatus to point out the hypocrisy and glad-handing going on in the media right now over the financial bailouts scandal. So here we go...

An article over at CNNMoney.com has me livid. Is everyone missing the point? The title of the article is "Be ticked off - but get over it" with the subtitle "You should be angry about the $700 billion plan to save banks. But once the rage subsides, realize that doing nothing would be disastrous."

Wow. Thanks for doing all the thinking for me (us).



The quotes used in the article were the real gems. Below is some analysis of those quotes.


"Taxpayers have every right to be angry because we've gotten into this mess by a combination of irresponsible behavior and lax regulation," -Chris Probyn, chief economist with State Street Global Advisors in Boston.

Lax regulation is far from the problem, and deregulation has absolutely nothing to do with it. If regulation has any role to play it's that regulations are responsible for causing this problem, and said regulations weren't comprehensive enough to account for all the Wall Street shenanigans that were employed to create and propagate this mess. As for the "irresponsible behavior"; a bailout rewards such behavior, it does not punish or prevent it.


"What makes capitalism work is borrowing and lending. The problem, without this bailout, would have been you would have condemned the economy to a period of halting growth at best," -Tom Higgins, chief economist with Payden & Rygel, a Los Angeles-based money management firm.

No. What makes capitalism work is, unsurprisingly, capitalism. Some "Chief Economist" you are, Mr. Higgins. Pouring taxpayer money into failed business structures simply delays the inevitable. Safety nets provide a disincentive for sound business practices; promoting cronyism and future problems in the affected sector. This is similar to what happens when you provide safety nets to an individual that has a severe addiction problem. If you shield them from the consequences of their actions, then the primary impetus for them to make an effort to resolve their addiction is wholly removed. This is also similar to telling someone that owns a "gas-guzzling" vehicle that buying a large gas storage tank and stockpiling gasoline to fuel their existing vehicle is preferable to switching to a newer and more fuel-efficient model. Ridiculous.


"We couldn't just keep applying Band-Aids. We have to have a comprehensive package or we'll just stumble from crisis to crisis. I don't like the bailout. It leaves a bad taste in my mouth. But it is the better of the two alternatives." -Chris Probyn, chief economist with State Street Global Advisors in Boston.

Well, Mr. Probyn, at least we agree on something. We can't keep applying Band-Aids, which is the primary reason why this bailout is shortsighted. It is a Band-Aid fix in and of itself; and it creates the very scenario under which we "just stumble from crisis to crisis."

The current problems in the financial sector are nothing new. This is, for the most part, a cyclical event that is perpetuated by government interference in the mechanics of (what is supposed to be) our capitalist system of commerce. This is just another in a long line of financial meltdowns that government has helped to create for us, and further interference will ensure that yet another crisis is on the horizon. It's not a question of if, but when, and how soon.