Dear Bush: Bail me out

Sorry if I appear ignorant about economics, but I just don’t understand how a government operating at a deficit of more than $400 billion can purchase a financial firm that lost more than $26 billion this year for $85 billion.

I guess that seemed like a good investment in our government’s eyes. I mean, the firm they purchased, A.I.G., is not losing anywhere near as much as the government.

Now don’t get me wrong – I really feel for all those former six-figure investment bankers who can’t bill their thousand dollar bottles of wine to the company account anymore – but all the bailouts this year are sending the wrong message, and more importantly, are going to hurt us the same way the burst of the mortgage bubble is hurting us.

These bailouts are all about rewarding failure and punishing responsibility. If you run your company’s stock price below $1, if you give mortgages away to anything with two arms and a pen, if you keep doing that so often that you’re financing your company on $33 of debt for every dollar of assets like Bear Stearns did before they were bailed out this March, you can get yourself a big check from the government. If you take steps to limit risk like Lehman Brothers did, the government won’t save you. You will have to declare bankruptcy.

I’m not saying that Lehman Brothers was responsible; they were just more responsible than some other investment banks that the government bailed out.

The people getting hosed the most are the American taxpayers. The economy is failing because banks lowered their standards and gave away mortgages that they should have known they wouldn’t get back. Now the government continues to give away money that they don’t even have in the first place.

President Bush can talk all he wants about how raising taxes will ruin the economy, but you know what else will ruin the economy? Going billions of dollars into debt to purchase investment banks that are billions of dollars in debt.

Bush seemed to understand that concept in March when he spoke out against government involvement.

Bush told the Economic Club of New York on March 14, “The temptation of Washington is to say that anything short of a massive government intervention in the housing market amounts to inaction. I strongly disagree with that sentiment. ... I’m deeply concerned about law and regulation that will make it harder for the markets to recover.”

That, of course, was before the government bailed out Bear Stearns, Fannie Mae, Freddie Mac and AIG.

Ah, the beauty of American capitalism. If you reap record profits, you keep them. If you fail, the government subsidizes you.

Let’s get back to real capitalism. If you take, you deserve to reap the reward or the loss. If you make stupid mistakes that cost billions of dollars, that’s not my fault.

I only hope in this new American capitalism that the government will bail me out if I ever go broke.