Why be a responsible person?
Why stick to a personal budget? Why pay your bills on time? Why manage your borrowing wisely? Why save for retirement? Why cut square corners on taxes?
It's become pretty obvious over the past few weeks that tens of millions of Americans who have acted responsibly their whole lives are now going to pay -- and pay dearly -- for the mistakes and deceptions of those who didn't. And it's not the less fortunate we're cleaning up for here -- many of them are laughing all the way to their vaults. Notice how the banks aren't going to go into bankruptcy before the government buys all their dud loans -- no, they're going to be allowed to dump the sludge onto the American taxpayers and stay in business, with the CEOs raking in the millions, same as ever.
Meanwhile, what about the real estate weasels who built junk towers like those in Portland's SoWhat district, with hundreds of unmarketable condo units in them? Once the federal government owns those loans, will greedy developers like Homer Williams be allowed to walk away from their debts, keep their eyesore buildings, and order another bottle of Dom Perignon at Bluehour? When it happens, remember that you read it here first.
The leaders of both parties are hoping nobody notices what's really going on. "Oh yes, we must act now! To prevent a crisis in the global financial markets. God forbid that Goldman Sachs [Henry Paulson's former firm] should go down."
How are we going to pay for this? For one thing, forget Social Security if you have a private pension -- it's now officially toast. Every dollar of pension you stored up is one less dollar you'll get back from all that Social Security "insurance" you were supposedly buying. You should have blown those 401(k) contributions on trips to Vegas -- you might have done better, and couldn't have done worse, than what you'll net from those investments now.
They may even tax the money you've put away before you get your hands on it. So as you look at the hole that Wall Street's ripped into your future this month, get ready for the government to make it bigger.
And for those starting out in their working lives now, either income taxes are going to have to go way up, or else the feds are going to have to print tons of money to pay off all the debt it's running up. The moment the Chinese government decides to cash in some of its $500 billion of U.S. Treasury bonds instead of lending us a billion more every month, there will be nowhere else to turn for more money -- except you or the printing press. At some point, either you won't be able to afford a $3 loaf of bread, or you'll have plenty of dollars but the loaf will cost $25.
I wonder how long the Chinese are going to toy with us before they take us down.
In the meantime, wait 'til we get a ways into the coming winter of $4 heating oil and equivalent natural gas prices. Something tells me that before too long, there's going to be some stuff going on in the streets about all this. See you out there.