Failure can be a good thing...

It never ceases to amaze me how low the bar is set on level of knowledge for some journalists. Most mornings we turn on Fox News and listen to the banter as we get ready for work. Even on a conservative leaning program where one would expect some level of edumacation, it floors me some of the statements that are made. In a debate with Glenn Beck this morning, Steve Doocy vehemently asserted (paraphrasing here of course) that 'we can't let the financial / bank system fail...it is the fundamental basis for our economy'........Why do the call it BANKruptcy????

A quick aside - roughly 10 years ago, we were damn near to bankruptcy ourselves...Living in LA on 3400 a month, with a $1400 a month rent, many many bills, a five year old and a newborn, recently having combined two salaries and two debt loads to one salary and two debt loads (whatever anyone ever tells you about Mary Kay is a load of crap - Hobby? Yes! Tax write off? Absolutely. Means to get out of the house and away from the kids from time to time? Sure. Unless your wife is constantly surrounded by a horde of makeup addicted, addle-brained pink-loving women with disposable income and a preternatural desire to participate in multi-level marketing programs, don't EVER consider it an income!!!!) Shannon was pretty responsible with her bills, I was the epitome of the "drunken sailor" in my approach to credit. So what did we do? We PAID....and paid and paid.... Got "credit counseling" which is a nice way of saying "don't call us anymore - call these guys..." They helped us reduce some interest, get other bills prioritized. The credit companies loved us... What also happened is that our approach to credit became ingrained in our psyche... We learned to spend first and save later. As a result of that debacle, we are now nearing retirement (thank God for the pension) with no "nest egg" save for some accumulation in our TSP account, still many bills, and little disposable income. The late payments and "black marks" on our credit history are gone now that more than seven years is under the bridge, but we are still haunted by the "debt to income" monster....

So why didn't we declare bankruptcy? Mainly because that little caveat that it is REALLY difficult to maintain a TOP SECRET security clearance with a bankruptcy on your record...kind've bad career wise. But what if that hadn't been a concern? What would have happened in a Bankruptcy? We would have stopped any and all bill collection, our debts would have been negotiated down...(i.e. you have been paying $250 a month for the past three years on this $10,000 debt and it now stands at $7500.....you have paid enough) The monster of cyclical compound interest would have been slaughtered. The "valid" debts - signature loans, car loans, etc would have been renegotiated, and we would have been able to set a new budget based upon savings, our finances and finally debtors.....guess what? If we would have declared ten years ago, that too would have been off of our credit history (or nearly so - can't remember if they stay on ten or fifteen years) and we would have ten extra years of retirement / college tuition investments growing.

So why in the @#$@#$%$#@% is it so difficult for punditry to understand the concept of bankruptcy? NO - the bank doesn't "go under" or cease to exist....No, mom and pop don't lose their life savings - that is why the FDIC exists... Those organizations or activities that lose money because their deposits were not covered by FDIC should have diversified and shouldn't have taken that much risk. (tough love works!)

GM could have given the finger to the unions, had bankruptcy court sell off their bad assets and they could have re-emerged leaner and more competitive....the reason GM "couldn't fail" had nothing to do with their size - it had everything to do with the UAW's backing of the Democratic Party.

Bank of America and Citibank are not "too big" to fail.... Same thing - bankruptcy court would allow them to shed bad debt and move on. And what is this bad debt? The same financial instruments that poisoned the well - high risk mortgage instruments who's "owners" don't have the means to repay. Well bankruptcy court can handle that too - set up a bad debt receivership, go after the "poor people that got taken by the evil predatory lenders".... "Predatory lenders"??? give me a break - I wish someone would have broken into my home, put a gun to my temple and forced me to sign paperwork that will give me hundreds of thousands of dollars that I couldn't payback in a bear market.... Let the buyer beware.... it is exactly that sort of me first, nanny state, kindergarten cry-baby attitude that created this situation in the first place. Maybe by putting a little heat on these people instead of having ACORN come around and help them squat in property that they don't own anymore, that would teach them next time to look a little more closely at the terms of their contract.

Let the banks fail - eliminate the cancer, then start healing. "Nationalization" is just a form of chemotherapy, and I would like to see this nation get better before it loses all its hair, and is stuck in bed with an IV surrounded by doctors who upon realizing that your bank account is empty "can't do anything for you anymore but to make you comfortable...."