Obama--What Kind Of Bailout?

Obama has already shown us that the advancement of his political (some might use the hackneyed word, “liberal”) agenda means more to him than his plans to improve the economy. He did that yesterday when he created an unbridgeable divide between himself and those whose votes he might need for the bailout package by abrogating Bush’s executive orders on abortion—before the vote was even in on the bailout. Wretched timing—if he was serious about a bi-partisan bailout.
Obama didn’t cause any of the huge economic problems we face. Today I watched an independent film called “Maxed Out” on credit card debt and how it is promoted. As one senior executive of a credit card issuer put it, “We make our money on people who cannot pay.” Talk about a scary movie.
It suggests without saying a word about it that we have another tens of millions of Americans who may need a bailout from their credit card debt. Otherwise, as the film says explicitly, their only way out of debt is to die and leave it behind. Assuming they can avoid bankruptcy by servicing the debt that long.
We have home owners in structures they cannot really hope to afford—even with help unless the help includes massive debt forgiveness. They have already bought them, owe thousands upon thousands in mortgages that they simply cannot hope to pay—along with the necessary cars and taxes and appliances and maintenance—let alone college tuition and medical bills.
As long as they can open another credit card or borrow a few more thousands here or there, the dance will go on. How long can banks and lenders afford to go on subsidizing customers who can never hope to pay them back? Even if they’re making money on them today.
Oh, and there’s a new credit card coming out. If you fall behind on your payments, no problem. It just pulls the cash out of your retirement funds. So what if trillions of dollars worth of those funds have already been lost.
Do you see bailout? Do you see lots of bailouts coming? Do you see a Democratic President and Congress who have the votes to force their version of bailout without a concern from what any loyal opposition might say? He’s perfectly willing to stick his finger in Republican (and a few conservative Democratic) eyes by going ahead on abortion and fetal stem cell research.
What kind of bailout does Obama really have in mind. As I reflected on what Obama has said and what he is proposing, a story came to mind out of ancient Egypt. It’s far from a perfect analogy, but there are some interesting similarities.
Once upon a time, Egypt enjoyed several years of incredible prosperity. Crops were unbelievably good; there was no room to store all the grain (note that private individuals didn’t store grain in good times. They wanted government to do that for them. They just enjoyed the good times). Then came the inevitable “bust”, a famine that lasted several years while crops didn’t grow.
People got hungry. They turned to the government. “Feed us (bail us out),” they begged. An alien who had faced serious discrimination and even done time in jail was running Egypt at the time. He probably had no love for Egyptian culture, but he gave them the bailout they begged for. He fed everyone. No one, even if he hadn’t stored anything himself, went hungry in all of Egypt.
Just one catch. It may have looked like a government giveaway, but the ex-convict wasn’t giving the Egyptians any real break. He sold food to them until they had no more money. The famine went on. They pleaded for another bailout. He gave them another bailout.
This time he took all their cattle (real wealth in an agrarian society). The famine went on. They begged for another bailout. Now he took all the privately owned land in Egypt in exchange for food. But the famine went on. Another bailout was needed.
In return for food, this last time he made slaves (sharecroppers) of all the people in Egypt. Their money was gone, their equities were gone, their real estate was gone, and they were slaves in their own country—all in return for desperately needed government bailouts. (Genesis 47, the story of Joseph in Egypt.) For the next few thousand years, that’s how Egyptians lived—property of Pharaoh.
This just might be a cautionary tale for us as we watch the political party that has never loved capitalism (which did make America rich) gear up to do surgery on our economy. We might want to keep an eye on the kind of bailout they have in mind for us. Some things really need to go away, some things really need to be changed and regulated.
Let’s be careful that we don’t find our “lands, cattle, money and freedoms” all nationalized.
The more I watch Obama, the less I am sure that he has any use for the notion of balance in our economy—government working in its sphere, private industry working in its—each helping and restraining the other in order to grow the economy. (This kind of division has worked in our government.)
Bush may have been way too tilted toward the private industry side—but Obama seems far too tilted in the other direction. Certain freedoms—as the ancient Egyptians learned—once lost are terribly, terribly hard to get back. Bailouts can come at a heavy price.
After all, as the Egyptians lived like the proverbial grasshopper in good times, individual Americans made most of this mess. They’re the ones who didn’t store up in good times. They just bought and bought and bought. Don’t compound the mess by accepting bailouts that could destroy you. Be wary.