Wednesday, October 1, 2008

Bankruptcy is the American Way

Dr. Phil on his television show about four years back said that bankruptcy should be considered the one time only "Get out of jail free" card.

At the time I was recovering from an extreme on job injury and despite what everyone tells you worker's compensation did not pay the bills. I had great credit and lots of credit cards and was sure I could catch up until I encountered the bank games of raising rates if you are late (with a head injury being on time is a challenge), etc. Hey, at the same time they are raising your credit limit they are charging more and more for the privilege. So after much soul searching (and thankful both parents were dead and would not know) I filed Chapter 13. I am still paying into that trustee account and will for another year.

G. W. Bush almost immediately toughened up the bankruptcy laws to protect his credit card issuing friends, but the truth of the matter is few people enter into bankruptcy lightly and in the majority of cases it is because of medical problems and debts.

Nobody bailed me out. Nobody is bailing out those in foreclosure or those in bankruptcy. But GW wants to bail out the investment banks that created these foreclosures and bankruptcies. We will end up paying more to rescue these banks and investment firms than they are worth. They need to go bankrupt. In a reorganization bankruptcy they can get out of the golden parachute contracts. And their bad investments can be sold for what they are really worth and not some inflated figure they are cobbling up for the bailout.

Bankruptcy does not mean these firms will cease to exist. It means they will be revalued to what they are really worth and others will probably buy them up. They are currently reluctant to take offers on the table because they see a golden parachute for the whole company in this bailout pig with the lipstick calling it a rescue plan for the economy. And they are even refusing to lend money they do have to force us into urging this bailout as opposed to bankruptcy.

Yes, there will be a readjustment period but we need that. Home prices are artificially inflated. And congress needs to work on putting regulations back in place over investment and lending institutions. And the $700 billion (the ultimate price tag will probably be a great deal higher after all the blackmailing going on) can be spent to invest in our infrastructure putting people back to work at good paying jobs here in the United States building bridges and railroads and developing green energy sources.

Write your representatives and tell them to point the way to the bankruptcy courts. Do not pass go and do not collect $700 billion of taxpayers' money.