Stop the Spending!

President Obama is in a tough spot.

(1) The country is under a crushing weight of ever increasing unemployment at over 8% across the country, the worst federal unemployment rate since 1983. Unemployment is at 10.5% in California, the worst since the 11% of 1982!

(2) The stock market is in the tank, although this seems to have leveled off. Let’s hope this is the trough with a gradual increase to follow.

(3) The financial markets are seemingly in chaos. Banks and lending institutions are being told to lend, but they’re afraid. They have money to lend but are fearful of what lending strictness to impose. Should they revert back to the safe old adage, ‘The only people who qualify are those who don’t need it.’ I guess that’s preferable to ‘Give it regardless of qualification because the borrower meets a federal guideline that is not tied to their capacity to pay back.’ The result of that 2nd looser adage of recent years clearly didn’t work.

(4) Then there’s the corporate bankruptcies and bail outs. Where’s all this money coming from? Also, are we at risk of the devaluation of the dollar with so much of it being printed and doled out?

For the sake of readability I’ll be brief. To sum up my feelings: I’m fed up! Close the Federal wallet!


I offer my Two Step fix:


I. No More Bail Outs.

Let the market forces fix the problems. There’s an obvious reason why not to bail out these failed companies. Strong well run companies taking over the assets of the losers will heal the economy. Yes, it’s going to be painful. The repercussions of unemployment and economic woes will be shorter if the market forces are allowed to work as opposed to artificially prolonging the pain and subsidizing the losers. The losers should emaciate away.

Example: Let’s say there are two companies competing in the same industry. Company One makes poor decisions compromising its financial strength and it goes bankrupt. Logic says, “ You screwed up. You’re not as good as Company Two. Sorry, you’re done.” But government says, “Sorry to hear of your misfortune. These are tough times in which we live. We’ll help you along.” Giving Company One bail out money is the wrong thing to do. Here’s why:

(1) Rewarding poor decisions or a poorly operating enterprise is destructive. They behaved foolishly or poorly and failed. Their reward for foolishness should not be an undeserving do-over. Rewarding bad behavior begets bad behavior. [Sounds like our welfare system.]

(2) The competing company, Company Two, that has been doing well should be in a position to now take over Company One’s clients and market share as a result of Company One’s failure. That would reward the properly run Company Two and make for a stronger industry as the well run company becomes the industry leader. But this proper sequence is disallowed by the bailouts. Upstanding Company Two is now denied this natural order of the capitalist system. This makes the economy weaker by denying the effects of the natural progression.

Sure, I know, the government’s doing more than just giving money on these bailouts There’s some ownership and guidelines being discussed as to possibly how the money is to be spent. Given the amount of dollars being put forth there is certainly an inability to properly monitor. I have no interest in bailout money flowing, being allegedly misused, and then a federal verbal beat down being issued on the same company that was previously deemed a worthy recipient. They already failed once with their own money. Are they supposed to be healed and smarter now that they’re using our money?


II. We, the tax payers, are paying for all the Federal spending. Close your wallet, Mr. President.

I’m a free market kind of guy, you have no doubt accurately detected. If a free market system runs afoul or screws up, does government involvement really sound like a fix? Look at government. What part or aspect of government itself do you think is well run and inspires you to think it can lead or furnish corporations with smart business advice? If the free market system is askew, let the market forces straighten it out. If illegal actions have taken place let the legal system prosecute and pass down jail time to the corporate offenders. Heck, blow out a few corporate knee caps while you’re at it. Send a message, not Billion dollar checks.

The continued generously robust federal borrowing and printing of money is a problem. With the spending and budget going nuts on a federal level we run the risk of the dollar’s devaluation. With that possibility, Americans must ponder do we save our money and hope its value hasn’t decreased by the time we finally access it? Or do we spend it now while it still has value?


Sure would be awesome if the government stopped spending and instead spent more time thinking. The fixes that are being implemented may take decades to fix.

Thanks for hearing me out.
-klem