Bail Me Out!

As we all know, the 700 Billion dollar bailout plan was passed several weeks ago.  This morning it was announced that the first parts of that money will be given out.  It's started off with AIG getting 40 billion dollars.  However, because of this, the government will now have partial ownership of the company.  

Does this sound familiar?  No?  It brings to mind something that we've fought against for many, many years.  Communism.  Now, I know there is no such thing as a completely free-market economy, but ours is supposed to be pretty darn close.  This has me questioning our motives.  Wasn't Castro looking for the same thing?  

By creating a bailout plan like this it takes away a company's responsibility to perform and the very essence of a competitive market.  Let's think about why the Russian economy went under.  When the Russian (Soviet at the time)  government had a stake in it's industries, it couldn't let them fail.  In other words, it would spend whatever it took to keep them running.  This seems to be what is bound to happen when the U.S. Government has a partial ownership over companies like AIG.

By not letting companies fail, like what is supposed to happen in a competitive market, you put your government at risk.  Now, instead of just the company failing, you have the government taking a financial hit.  And who pays for this?  We do.  Are we all of a sudden communists?  

We should be bailing the people out, not the big companies.  If we leave the market alone new companies will find there way in and make money.  That's how it works.  We can't expect to be on an economic high all the time.  There all lulls in the system, that's how it works.  It's usually just controlled by attitudes.  Look at the markets the last couple of days.  They're on the upswing.  Why is this?  We have a new president?  No.  The bailout is starting?  No.  It's the Chinese.  The Chinese have just created a bailout in their country of 586 billion dollars.  But, along with this they've created tax-cuts and looser credit policies.  

The Chinese have done things the right way.  They aren't getting the money from the people, they're putting their own asses on the line.  They are trying to stimulate a boost, by lowering taxes and loosening credit lines.  So what did they do?  They went out and bought stock in an economy that will soon be government controlled, so how could it fail??

Good morning Alaska.

-Nick