The Hair of the Dog

2008 is mercifully coming to an end. The year of the #-backward; the year of the bailout, the meltdown and of failed leadership will soon be behind us, as will the disaster known as the Bush Presidency. Unfortunately, it appears as if President Bush isn't quite prepared to saddle up and ride off into the sunset singing "Home on the Range" just yet. His approval of a bailout for the auto industry is yet one more nail in the coffins of capitalism, our constitution and individual freedom.

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Back in September, Americans expressed their distaste for bailouts of any kind. The president assured us when pleading with Congress for a bailout of the financial industry that it was an extreme measure and that bailouts wouldn't become the national pastime. Yet they have. He assured us what they were doing wasn't socialism. But it is. The US government now has an ownership stake in a large segment of the US financial industry as well as in the major players of the US auto industry. When Congress announced that their legislation was the only solution to this problem, I said it would fail - and for specific reasons.

Hank Paulson was given too much power.

The legislation had too many loopholes.

It was far too big in scope, open to any financial institution.

It would result in other industries coming to Washington with their hands out.

So let's look at what's happened since October. The stock market has not stabilized and remains volatile. It has been on a white-knuckle roller coaster ride with huge swings ever since the President's announcement. Three-hundred fifty billion of the 700 billion has been spent. Billions were given to banks that didn't need them. By taking these funds, these institutions sent the signal they were in trouble. But some of them ended up using the billions they received to fund employee bonuses. Others are holding on to the money and adopting miserly lending practices. The Troubled Asset Relief Program (TARP) has been a utter failure and waste of taxpayer money thus far. And now this failed policy is being extended to yet another industry. The TARP was specifically intended to stabilize only the real estate and housing markets. There is no mention of using bailout money beyond rescuing homeowners or financial institutions. Therefore, the President's use of TARP funds for the auto industry is strictly unconstitutional. When the C.E.O.s of the Big Three automakers met in Washington, they asked for an emergency loan on the order of 40 to 50 billion. Mark Zandi, Chief economist at Moody's Economy.com testified during those hearings that to avoid collapse, the Big Three would require 100 to 150 billion.Yet, in a token move, so typical of the spineless dimwits running the country today, Bush gave them 17 billion, in return for promises to restructure by March 2009 or pay the money back, which everyone involved agrees would never occur. This means, there is a higher likelihood that these companies will either eventually be allowed to fail, after spending 17 billion dollars, or they'll be back with I.O.U. in hand wanting more money. And anyone familiar with the meat grinder of corporate restructuring knows the first thing slashed is payroll. We're being told this move is necessary to avoid millions of layoffs, but that's exactly what restructuring brings. American taxpayers will be subsidizing the layoffs of hundreds, perhaps thousands of auto workers. There is scant evidence to believe that any of these bailouts will produce anything more but a perpetual cycle of debt and dependence - Franken Finance. This is a path we should have never set upon. Now that we have, it's time to get off. A few weeks ago, the Federal Reserve cut the Federal Funds rate - a move which offered immediate help, but one which should have been made long ago. Had the Fed lowered that rate in September, it is a virtual certainty that thousands of homeowners would have avoided foreclosure without having to accept government welfare and millions more would be more financially secure in their homes today.That single move may have even rendered the 17 billion dollar bailout unnecessary. Other measures that should have come before bailouts include changing the draconian rules that lenders have imposed on credit balances. Where does this end? There is no evidence that Obama's administration will be any different. One of his first priorities is to pass another stimulus package. What the current crop of politicians, including Mr. Obama, don't seem to understand is that we're already running a deficit. They've spent us into insolvency, so the stimulus checks Obama will send you won't be worth the paper they're printed on. We're in this mess because too many people spent money they didn't actually have. Increasing deficit spending as a solution to our economic problems is analogous to the alcoholic who drinks upon waking in the mistaken belief that he hair of the dog that bit him will cure all his ills.