“I’m mad as hell, and I’m not going to take it anymore! You’ve got to say it! Then we’ll figure out what to do about the depression and the inflation and the oil crisis.”
Peter Finch delivered these classic lines in his Oscar-winning performance as a newscaster in the movie “Network.” His words are eerily prophetic.
As I pen this piece, taxpayers have already bailed out several financial institutions – Bear Stearns, Freddie Mac, Fannie Mae and AIG – each deemed “too big to fail.” And now, members of our Congress debate whether to fund a massive $700 billion bailout of our nation’s entire financial system. Talk about too big to fail!
Some people believe that our government should do nothing; that ordinary taxpayers should not have the burden of rescuing our economy. Here’s a sampling of Internet blogs discussing the issue:
“Let it crash. Let them learn the consequences of their actions.”
“Do not allow this bailout! Let them fail! That is what a free market is all about.”
“Rich people should suffer from their own mistakes. Don’t penalize ordinary people.”
No doubt Peter Finch, if he was alive today, would recognize the modern version of his memorable lines. Unfortunately, scrapping a rescue plan for our country’s financial system because we are “mad as hell” isn’t really the issue. Let me explain why:
Imagine our financial crisis is a forest fire, one that started in a remote corner (subprime mortgages) of a vast forest (our economy). Worse yet, imagine it started because someone recklessly flicked a cigarette butt on the ground (greedy investment banks). The initial blaze, though obvious to some, goes largely undetected because it doesn’t directly threaten most people.
But this fire grows and is fanned into surrounding areas by unanticipated gusty winds (economic slowdown and rising oil prices). Because of its sheer size, people take notice. Firefighters (federal funds) are sent to quell the flames but there aren’t enough of them to control the blaze. More firefighters are urgently needed because the fire is relentless. It continues to burn out of control.
It is finally determined that a vast amount of resources must be deployed immediately to keep the entire forest from burning … and that’s when the arguing begins. The forestry and ecology experts (the Federal Reserve chairman and Secretary of the Treasury) urge the public to approve a plan to save the forest. They warn of unfathomable consequences for all citizens, not just those who live in the forest. Another group argues they didn’t start the fire, so why should they pay for any efforts to save it? The final group insists that it is perfectly okay if the forest is destroyed. They claim that the forest will grow back in 100 years, that this is nature’s way of starting over.
While the three groups bicker and quarrel, the fire rages.
It’s hard to argue with those who believe they shouldn’t be penalized for someone else’s mistake; they played by the rules, the banks and Wall Street didn’t. But placing blame isn’t going to protect their 401(k) investments or save their job. Simply put, they’ll have time to find and punish the guy who flicked the cigarette after they’ve protected their own house from burning.
For those who think doing nothing will somehow be a cleansing process that validates free market ideology, I suggest reading a few history books. The last time our economy collapsed was the Great Depression. In three years, from 1929 to 1932, our country’s GNP fell by a breathtaking 30 percent. Unemployment nudged 25 percent and didn’t discriminate. People lost their jobs, not because they were responsible for the mess, but because their company couldn’t sell enough products to be profitable. Yes, like the forest that rejuvenates in 100 years, our economy will come back. But is ideological satisfaction worth a generation of financial hardship?
Obviously, the debate in Washington is more complicated than my analogy; checks and balances and many details must be considered. Still, time is of the essence. The unraveling of our economy, and therefore the world economy, is occurring right now and right before our eyes.
Let’s hope our leaders embrace a plan that begins to eliminate this terrible threat. Then we can all open our windows and shout, “We’re mad as hell, and we’ll never let this happen again!”
John Zaiss is the president of Crescent Capital Management Company in Whitefish.
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