Tuesday, March 24, 2009

"Toxic Assets"

The media, markets, and Congress are abuzz with "Toxic Assets." They're also attempting to rename this "legacy loans." It simply sounds better when you're talking about using taxpayer money to "buy it."

But what exactly are we talking about with "toxic assets?" Those are the predatory loans made by the greedy to the greedy based on unrealistic rises in real estate values. These are the loans that should never have been made. These are the risks that corporations took in a belief that they would make astounding profits, that failed.

Simply, they are bad loans, foreclosed loans on real estate not worth the borrowed amount.

Your "representatives" think that you, the taxpayer, should pay 2005 inflated prices in order to get the banks out of the trouble they got themselves in. It will have the marketed effect, the banks will be better off. Their stock prices will go up. It will benefit the corporate constituencies of our elected officials.

This comes at a cost to you, the taxpayer. It is wrong. Capitalism is a system of personal and professional responsibility. It allows individual choice and freedom. It rewards good decisions and holds each responsible for bad decisions.

An underlying but unstated right of the Constitution, Bill of Rights, and Capitalism is the right to be wrong and to let the world know that you are wrong. If you decide to pay $100,000 for a 2010 Ford Mustang believing you can sell it to your neighbor for $150,000, your friends may tell you you're out of your mind. But that is your money and your decision to make.

If the neighbor pays the $150,000 for it, we'll shake our heads in disbelief, but if you end up selling it to him for $50,000, it is not our responsibility to make up the difference. And that is what Congress is doing. They're making us pay the difference in the losses of banks.

To be a bit more accurate, it would be like a single person bidding and purchasing an entire estate at auction regardless of bid price, selling everything that could make a profit and then coming to their neighbor and expecting them to pay the price bid for the items not worth the price he paid at bid. Now imagine that it was the richest man in town that did that and exacted the losses on every worker in town.

It is not right. It is not Constitutional. It is not moral. It is not capitalism. It is not the American way.

These corporations took the risks. They got greedy. And they got burned. It is NOT the responsibility of the taxpayer, i.e waiters, factory workers, and Soldiers to pay for the bad risks that the corporations made.

Tennessee Taylor©2009, TNT, all rights reserved

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