more admissions...the bailout

I know. You're thinking...oh god, first it was Nebraska football, what can it be now?


I am a structured finance geek.

Yeah. Stunned?

There are probably several of you who look like cartoons with a big ole' bubble over your head and that bubble contains a "?" Right? And some of you are thinking, "What? Wait. She likes pink pashminas and has a bag and shoe obsession and she lives in the Midwest, for gosh sake. Structured finance people are on Wall Street, with pocket protectors. (Or Armani suits.)" And then there are some of you who have already pressed "exit" and are outta here because you don't want to read a blog containing the phrase "structured finance".

For those of you who are still here, what I mean is that most of my litigation work surrounds situations like the current mess in the financial markets. That stuff is what I do, people. Well, at least I clean up the messes left by what is in the news. And to further clarify, what is in the news hasn't hit litigation yet...it's still too early for people to be suing each other much. In fact, I'm still working on the last bubble burst...most people don't even know about it. In 1998-99? Asian market drying up? Blah, blah, blah. Yeah. I'm losing more of you, aren't I?

So why am I telling you this? Well, because it's all over the news, silly. And I need to throw in my two cents.

First of all, if go read this. It's really a pretty accurate, simplified explanation for what's gone wrong.

So here is my two cents: the government has to do something. Nothing is not an option. Trust me. I'm not going to pretend I know what that something is. But they can't just leave it. You will not like the results of doing nothing. And I'm not necessarily in favor of bailing out the banks in their current incarnation. Without change in oversight, throwing more money at our current institutions is not going to fix anything. We've had the fox guarding the hen house, folks. Nothing's going to change until someone shoots that damn fox--or at least traps him, hauls him out into the forest and drops him someplace where he can't do anymore harm.

And what does that ultimately mean? It means that ugly 10 letter word--regulation. Yup, seriously. Maybe that means government needs to get bigger. It definitely means government needs to do a better job. But this let them run amuck stuff? It's not working.

But here is my oversimplified view. This nation is drunk on credit. Most people borrow too much. Most companies borrow too much. The government spends more than it should. Example...when the government decided we consumers weren't spending enough and they wanted to give us a tax rebate? The government borrowed the money from the Chinese. Brilliant.

Quite frankly, we've just got to stop all the spending. Truth? Not everyone can afford a house. This means, not everyone should own a home. That's what rentals are for. (I sound very Republican. I know.) More truth? Not every kid needs a Wii. Truth? Borrowing...including credit cards...must be used very carefully. Truth? Almost everyone in this country, including our leaders (and me), spends too much and saves too little.

So if we are drunk on credit, what's the solution? Let's take that drinking analogy a little farther. If you are drunk, how do you get undrunk?

You quit drinking.

And if you are addicted, quitting will suck.

And even if you aren't addicted, you will have a hang-over.

There is really no way of avoiding the hang-over.

I mean you can drink more and avoid it for bit, but ultimately?

It's going to hurt.

In other words, I don't believe that more credit makes sense. Sure, we need to keep liquidity in the market. But we do not need to keep making home loans to people who cannot afford the houses they want. We should not keep offering more credit cards. We all...individually and as a government...need to learn to live within our means. And that can pinch... which is another word for hurt.


Just my take on stuff.

It's a banking house (the First Bank of the United States, 1795-1797, Philadelphia, Pennsylvania).

After thought...I know this is easy for me to say. I make good money. And I've worked very hard to get here. I borrowed for my education and I'm still paying it back. Yes, it's hard to look someone in the eye and say, "You just can't have what I have." I do believe that everyone deserves the basics--food, shelter, clothing. But ownership and perks? They aren't needs. We try to teach our kids the difference between need and want. But I'm not sure most people remember that difference. For someone living on the margin, it's a very important distinction.