Monday, September 29, 2008

Sorry Son, Wait for the Fed

Stick with this for a moment...

Son: Dad, thanks for the allowance.  I'm going to the movies next weekend and maybe buy some comics and baseball cards.  I might even have a bit left over from my $5.
Dad: Sure son, thanks for cutting the grass.
Monday at school: 
Billy: Hey buddy, can you lend me some money?  I really need just a few dollars to buy some stuff.
Son: Sure, but uh, I need the money back by this weekend.  Can you get it back to me?
Billy: Of course, and to show you I mean it I'll write this note.  It says, "You can have my bike if I don't pay you back by Friday."
Son: Great!
Monday night:
Son to himself: Hmmm.  Billy's bike must be worth more than $5.  Maybe I can sell his note to somebody and make a few extra dollars.
Tuesday at school:
Son: Hey Sam, you're always complaining that you need a new bike.  Wanna get one real cheap?
Sam: Sure.  But I'm broke today.
Son: That's ok.  Pay me by Friday.  Here's the note.
Wednesday night:
Sam to himself: Wow, this bike must be worth more than the money I paid...
Thursday at school: 
Sam: Hey Billy, I have a great deal for you...
Friday at school: 
Son: Hey Sam, got the money?
Sam: I'm going to get it soon.
Son: Hey, Billy, got the money?
Billy: Uh, no.
Son: So, I get to keep your bike?
Billy: Well, actually never really had the bike...
Billy: Hey Sam, where's the bike?  I gotta give it to Son!
Sam: But I never had the bike.
Saturday morning:
Son: Dad, can I borrow $5 on next week's allowance?
Dad: Sorry Son, you have to wait for the Fed to bail you out!!!

I think most of us would agree that it would be irresponsible for Dad to give Son another $5.  Son made a bad deal and lost his money.  Period.  That's free enterprise.  If Dad continually bailed out Son when would Son learn to be responsible.  If every time Son makes a bad deal and he knows Dad will bail him out, one might assume that Son will continue to make bad deals.

Sorry Son, you'll have to live with your mistakes.

Will America be worse off if the "bailout" is voted down, or worse off if it goes through.  Congress will at some point vote it into effect.  But they will probably load it down with earmarks instead of oversight.  

The American taxpayer will pay the bill.  But just try doing this yourself, like not paying YOUR bills and see what the Fed does for you.

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