I have not really posted in a while. But I thought I would take a moment and weigh in with this one. In all of the "fixing" that the govt wants to do, they seem to miss the problem that the very nature of govt "touching" something causes.
The govt wants strings attached to the money that they are giving banks, auto makers, etc. It makes sense. If you are giving money to get result "A", and people are choosing not to use your money for that intended puporse, then of course you would get angry. You would feel it is a waste of your money... and you would be right. But how exactly does a "private" business operate when not controlled, but is heavily "influenced" by the govt. The short answer is... that it cannot... at least not for very long.
The thing that makes a business... any business profitable and viable, is the free choice of what to do in daily operation. Is it such a radical thought that the markets should be allowed to correct this problem? I can see how bad things are getting out there, it frightens me as much as anyone else. But the more the govt continues to dictate to businesses what they are going to do, and how they are going to do it, the more damage will be caused. Most busnesses that I know of are as individual as the people that run them. By it's very nature the govt is more of a "one size fits all" solution kind of a place. What is good for one company will almost never be what is good for another.
It will not surprise me to see financial stocks continue to plummet. I believe the more money congress pumps into the banks in particular, the further and faster they will fall. Why would any investor want to invest in a company that is now subjected to the will of politics and not market demands? As an investor, I might buy stock in a comany based on what their balance sheets say, and if I think people want to buy their product. But how can I possibly know what political favors are going to be given (or not) to a company in the future? I would have to be crazy to invest in a company where their success or failure is no longer determined by what their balance sheet says, but in what political winds happen to be blowing at the moment. Does anyone really want to run a company that is profitable only because of how much influence it might have in the govt at a particular time? Do you start designing your business plan around what govt favors might be owed to you in a future quarter?
I believe that most of the folks in govt on some level really DO want to help, and believe that by throwing around close to a trillion dollars they will make things better. I fail to see how that can happen. When a business fails, it does so because it is no longer a viable business. That company made decisions that were not wise, or sell a product that people no longer want to purchase. To artificially "prop up" such a company is just to prolong the enevitable.
I wonder how long it will be until you start hearing the govt talking about laws to make it illegal for example to buy a foreign car. Or make the taxes on one so high that it would sort of be the same thing. What if the CEO's decide that 500,000 salary is not enought compensation for them and choose to leave their companies, and seek more profitable jobs somewhere else. Will the govt tell them they "cannot quit", because the econmy of this country "needs" them right now? When "for the common good" becomes your rallying cry, then your indifidual rights will always be trampled.
The govt wants strings attached to the money that they are giving banks, auto makers, etc. It makes sense. If you are giving money to get result "A", and people are choosing not to use your money for that intended puporse, then of course you would get angry. You would feel it is a waste of your money... and you would be right. But how exactly does a "private" business operate when not controlled, but is heavily "influenced" by the govt. The short answer is... that it cannot... at least not for very long.
The thing that makes a business... any business profitable and viable, is the free choice of what to do in daily operation. Is it such a radical thought that the markets should be allowed to correct this problem? I can see how bad things are getting out there, it frightens me as much as anyone else. But the more the govt continues to dictate to businesses what they are going to do, and how they are going to do it, the more damage will be caused. Most busnesses that I know of are as individual as the people that run them. By it's very nature the govt is more of a "one size fits all" solution kind of a place. What is good for one company will almost never be what is good for another.
It will not surprise me to see financial stocks continue to plummet. I believe the more money congress pumps into the banks in particular, the further and faster they will fall. Why would any investor want to invest in a company that is now subjected to the will of politics and not market demands? As an investor, I might buy stock in a comany based on what their balance sheets say, and if I think people want to buy their product. But how can I possibly know what political favors are going to be given (or not) to a company in the future? I would have to be crazy to invest in a company where their success or failure is no longer determined by what their balance sheet says, but in what political winds happen to be blowing at the moment. Does anyone really want to run a company that is profitable only because of how much influence it might have in the govt at a particular time? Do you start designing your business plan around what govt favors might be owed to you in a future quarter?
I believe that most of the folks in govt on some level really DO want to help, and believe that by throwing around close to a trillion dollars they will make things better. I fail to see how that can happen. When a business fails, it does so because it is no longer a viable business. That company made decisions that were not wise, or sell a product that people no longer want to purchase. To artificially "prop up" such a company is just to prolong the enevitable.
I wonder how long it will be until you start hearing the govt talking about laws to make it illegal for example to buy a foreign car. Or make the taxes on one so high that it would sort of be the same thing. What if the CEO's decide that 500,000 salary is not enought compensation for them and choose to leave their companies, and seek more profitable jobs somewhere else. Will the govt tell them they "cannot quit", because the econmy of this country "needs" them right now? When "for the common good" becomes your rallying cry, then your indifidual rights will always be trampled.