Why the Government is Bailing Out the Weaker Companies

Economic news has been really disturbing lately. Things just keep getting worse and worse and the American public has no clue!

Total possible funds dedicated to bailouts and the like has gone over four trillion dollars. The government has already “spent” over a trillion dollars combating our economic problems. All these things make me angrier and angrier!

But, I did have an epiphany today!

I actually had it when I was searching for articles on The Millionaire Next Door book. I have read it multiple times and I wanted to remind myself about some of the practices of millionaires in the book.

One particular book review stood out and it was Trent’s review at The Simple Dollar. Actually it wasn’t the review, but the paragraph below that really stood out.

There is one interesting phenomenon mentioned here that I’ve noticed repeatedly in my own life: parents tend to give more money to children with poor financial skills than to children with strong financial skills. Even in my own family, this is true; parents often give what little they have to the child who shows the least independence, while the child that works hard and shows the most independence get little assistance. On some levels, this makes sense, but on others, it merely reinforces poor behavior in the financially dependent child and can inspire resentment in the financially independent child. This further reinforces the idea that economic outpatient care is a bad idea.

This is EXACTLY what is going on in America and the world right now. We are reinforcing the dependent companies bad behavior and insiring resentment in those companies that have been independent and have run their companies by sound principles.

You know, I am glad Ford refused bailout money. It shows they are the stronger company.

Warren Buffett recently stated in his newsletter to shareholders that the government needed to intervene. This saddens my heart to think that he of all people would agree with that.

The government doesn’t need to reinforce bad behavior. Like a good parent it needs to encourage good behavior and gives strong consequences to bad behavior. It needs to regulate like crazy against the bad behavior!

Now if only we could agree on what good and bad business behavior is…

Comments

  1. hey- I like what President Obama is doing.

    I can’t really relate to the situation as bailing out companies that have poor business skills and a irresponsible adult that doesn’t know how to handle money.

    He has made great strides in the short time he has been in office and I think what he has done is very encouraging.

    This country needed a drastic change and Obama is the man for the job.He is not playing “big Daddy” he is looking outside the box.

    Cheers

    Bunny got Blog’s last blog post..Nellie Bly

  2. Jeremy,

    Wow. Talk about pushing one of my buttons. I read the news each day and I just FUME! I’ve written a couple of posts at a site regarding the auto bailout and my feelings about the free market having it’s way with behemouth companies that are unwilling or unable to change to meet market demands (That would be YOU, GM and Chrysler). I know it affects folks, but successful companies will rise from the ashes. And don’t even get me started about AIG.

    So, the government now says, “Hey, Joe Citizen. Tell you what. We need to stimulate the economy so we are going to pour BILLIONS of $ into giant, poorly run companies, and we are going to give YOU, a whopping $13 a week tax credit.” Please. Are they on crack? Do they really believe that is going to make any kind of difference for us?

    (goes and gets a double doe of blood pressure medication)

    George

    Tumblemoose’s last blog post..Writers: Does a library intimidate or inspire?

  3. Seems to me that no matter who is in office, the same steps would have been taken: bailout. The ordinary citizen has no say in what truly is decided in these matters, as evidenced by the first bailout, where the House of Representatives voted a firm “No” (calls from constituents were 9 to 1 against the bailout), and the bill was simply re-presented to the Senate and passed. Neither Democrat or Republican party members have the stomach or the integrity to do what is truly needed for the long-term stability of our country; they merely do what will make people happy now, and what brings the quickest “fix”. Just so I am clear: THIS BAILOUT IS NOT THE SOLUTION> it is merely a patch on a pothole riddled road which will give way sooner or later to a much larger problem. Anyone who thinks otherwise is merely fooling themselves and trying to find some quick comfort and short-term relief.

  4. @ Bunny – Don’t get me wrong. I like Obama and think he has a wonderful ability to unite people. I just don’t see any strong leadership coming from him. I don’t like the fact that he is rushing Congress to get a stimulus bill in place. Granted, government employment was tied up in it and many would have had to go on furlough, but it makes no sense to rush these things. I think Obama is still too wet behind the ears. I look forward to what he is capable of doing in the next year or two, and I hope for the best.

    @ George – Its should make us ALL FUME! Thousands of people protested these moves by the government to the tune of a 9 to 1 ratio. That should speak for itself. We protested and got denied! The government is taking the power away from the people and we may have to take it back. Those are my thoughts at least for now.

    @ Jason – You know I agree and you also know that very few people follow these turn of events as much as we do. We are all comfortable, maybe too comfortable with the frying pan we are in. Like frogs, the water has been slowly made to boil and we aren’t going to realize it until we are too late. So how can we convince people there is a better solution out there? And that we aren’t simply jumping from the frying pan into the fire?

    Cheers,
    Jeremy

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