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by Chip from Phillipston, Mass

Last Post 6 days, 15 hours Ago


Economic Alcoholism/Government Co-dependence
Sep 16, 2008 | 8:29 AM
Category: News
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I sit in my living room and watch with wonder our government once again try to dilute the consequences of stupidity.   What we experienced over the last decade or so was a failure, on the part of our economic institutions, to excercise appropriate restraint in their lending practices.  A week never went by that I didn't receive at least three calls, unsolicited, from mortgage lenders who wanted to sell me a "new and better" mortgage.  Now, we had/have a fixed mortgage on our house at 5.75%.  Not too shabby.  At each call, I'd strongly and forcefully tell the person who made the "cold call" the terms under which I'd do business (les than 5.75, no points or closing costs fixed for 30...) and each time , my wife, who has more manners than I do, would scold me for being to brusk.  I didn't see myself as being brusk, I saw myself as excercising economic restraint against promises of reduced monthly payments and better products.  I was being told I could have more fun if I consumed more.

Looking back on this time societally, I think the analogy of Economic Alcoholism fits well.  We were drunk with new and creative mortgages.  People who otherwise couldn't afford homes drank freely from the keg of mortgage bootleggers who made their livings by selling mortgages.  The situation was unrestrained by common sense, and has recenty staggered under the pall of bad loans.  Just recenlty, we have seen economic institutions like Bear Stearns, Fannie Mae, Freddie Mac, and now Lehmann Brothers "hug the commode" of economic failure and puke their economic guts out.  Economic drunkenness.

So, what do we do as a society?  Do we allow the drunk to suffer the consequences of his excesses?  Do we allow him to be caught and disciplined for his behavior?  Nope..we sure don't.

We bail them out like the kind, well intentioned and co-dependent wife bails out her drunken husband.  We are re-creating the likelihood of economic excess in our corporations with bailout plans, just as sure as the wife who calls her husband's boss and says he's sick when he's pukin' up Jack Daniels.

Ladies and gentlemen, as a man with 22 years of sobriety (Thank God and the Fellowship), I'm here to tell you it don't work with drunks, and it won't work with corporations.  There is nothing like the natural consequences of human behavior to help shape it.  Let the unrestrained corporations fail, and let the temperate ones prevail.  Capitalism cures Economic Alcoholism, not Government Co-dependence.

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Member Comments Total Comments: 16
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Graham_Cracker read my blog view my photos
Sep 16, 2008 | 8:58 AM

I agree...particularly with the statement "There is nothing like the natural consequences of human behavior to help shape it."
And by the way, I'm not "brusque" (correct spelling of the word, btw) with those callers...I'm downright rude because they're nothing but thieves. I usually screw with them, as I do ANY telemarketer. Telemarketers in general these days cannot be trusted, so they need to be made to HATE their jobs; so much so that they'd find greater dignity making Big Macs...in which there actually IS greater dignity.
Chip read my blog view my photos
Sep 16, 2008 | 9:41 AM

I never meant to be rude. I meant to be clear. I meant to shorten a conversation and to make clear to a potential vendor (no matter how remote that potential might be) what I would/wouldn't buy. Just business on my part...no more...no less.
Graham_Cracker read my blog view my photos
Sep 16, 2008 | 10:22 AM

Nothing makes it clearer than saying, "I'm not stupid enough to be taken by thieves, thanks." [click...sound of dial tone...]
Chip read my blog view my photos
Sep 16, 2008 | 10:56 AM

Here's the problem with that (other than bad manners): It does not leave the option open for someone to offer you (no matter how unlikely) 5.5%, no points or closing costs for 30...saving you about 10 large over the life of the mortgage.
Graham_Cracker read my blog view my photos
Sep 16, 2008 | 11:27 AM

The bad manners comes from the fat-cats who exploit these naive and unwitting puppets to demean themselves by making such insulting (to my intelligence) phone calls.
Nobody is interested in really saving me money. They're interested in using the latest crafty way to inveigle me right into a snare. I'm their worst nightmare. They're ALL transparent to me.
Chip read my blog view my photos
Sep 16, 2008 | 11:40 AM

I'm not responding to the "manners" issue. There is no where to go but ugly on that...but my point...the thrust of this blog, is that financial institutions, and business in general, needs to sink or swim on its own merits. AND consumers need t sink or swim on THEIR own merits. Caveat emptor.

Government intervention of the kind we've seen in the last few weeks only prolongs and enhances a problem. It does exactly the opposite of fixing ther problem. One of the natural consequences of bad economic decisions is poverty.

Period.
JuneInMA read my blog view my photos
Sep 16, 2008 | 1:21 PM

Chip,

Great post. Financial irresponsibility along the same line of alcoholism....never looked at it that way but it fits nicely.

I work for a big bank in the Risk Recovery area as a Senior Loan Analyst. Luckily, our bank always had somewhat conservative lending practices and although we have of course felt some heat (as has everyone), nothing major or even remotely close to what just happened to Lehman. I think you are absolutely right in that government needs to let them sink for their own mistakes. It's the only way to learn. I have heard of some pretty stupid things financial institutions have done even AFTER the economy started going south. No bucking up, no strapping the belt on TIGHT. Well, you have to fall and get back up then. All on your own.
Chip read my blog view my photos
Sep 16, 2008 | 1:54 PM

AND, June, doesn't the "bailouts" unfairly punish those like your bank who have behaved in more responsible ways? shouldn't your institution be floating to the top of the financial markets if their practices have succeeded where others have failed? Hasn't this stolen from you guys the rewards of winning?
JuneInMA read my blog view my photos
Sep 16, 2008 | 2:01 PM

Absolutely. It's along the lines of not rewarding the good kids in school so the ones that don't work as hard don't feel bad, I think.

You make stupid financial decisions, you sink and hopefully, by amending your practices, float again. You make sound financial decision, conservative decisions viewed as timid at one point and now exposed as great and you deserve to go straight to the top and be made an example of in a good way.

Guess it doesn't work that way, apparently. History has a way of repeating itself and at some point, it's not going to be feasible to bail them out anymore.
Zigulis101803 read my blog view my photos
Sep 16, 2008 | 4:27 PM

Hi Chip,

I know how hard it really is in this case and alot of stockbrokers have had the same problem as you are as well so don't feel back and maybe you might get on the right track and sometime we all do stupid things and we are all in the same boat as well. talk to you later!

Casimir Zigulis
fenwaydav read my blog view my photos
Sep 16, 2008 | 6:15 PM

Chip, What a great analogy. Your words are right on.

And to you Mr. Cracker (Dave). You have become a little more nasty in your old age. I dislike the Telemarketer as much as the next guy. These people are doing a job they get paid to do. It may be the only job available to them. Who does it help to be more nasty than usual. I find a simple no thank you and hanging up just as effective.
ahumbleman read my blog view my photos
Sep 17, 2008 | 9:36 AM

I think we should stop calling these "bailout" and start calling this what it really is, nationalization. The government now completely controls Fannie Mae and Freddie Mac, and last night just acquired the largest insurance company in the world. I wish the media would stop using the term bailout, because what is really happening is government takeovers. We're drifting further and further away from capitalism and closer to socialism when the Federal Government takes actions such as it has these last couple of weeks.
Chip read my blog view my photos
Sep 17, 2008 | 3:50 PM

AND, chris...what has the Federal government ever managed correctly...very very scarey.
FoxFan67 read my blog view my photos
Sep 17, 2008 | 8:35 PM

that was brilliant Chip , the way you rolled it all together. its almost dare i say it that you have to let it hit rock bottom.

fenway , thought the same exact thing. no need to be rude, this may be the only job option for the said telemarketer on teh other end.
i'll be the first to admit i used grahams approach in the past. but i have noticed you get alot further with niceness.
Xantun read my blog view my photos
Sep 17, 2008 | 10:38 PM

Chip, I wouldn't let the Federal government manage my cookie jar (which happens to be empty, since I live with a diabetic), let alone insurance and banking institutions.

And for the telemarketers, I've instituted an "unavailable" number block on my phone. Which means I don't get the calls. But, the few that do sneak through get politely told to put me on their "Do Not Call" list, as well as their number noted down. None has ever called me after that. If they had, I'd lodge complaints with the FTC. (Enough lawsuits and some of these places won't have the funds to keep offering these stupidly risky loans)
fenwaydav read my blog view my photos
Sep 17, 2008 | 10:43 PM

FF67, In another day and age I might have let the telemarkter take me hostage. I guess as I get older, I relize I don't have the time to kill. I still believe it is just as easy to stay no thank and hang up as it is to give them a bunch of crap.
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Chip

Just your average guy, married to a woman who is incredibly smart and possibly more conservative than I am. Father of three and grandfather of one soon to be two. Devoted Patriots fan and season ticket holder, snowmobile enthusiast and lifelong public servant.

Member Since: 9/26/2006


 

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