The dangers and evils of debt relief

China is bailing out Europe and Obama wants to forgive student debt. I don’t know which is worse but they’re both terrible calls.

All of these Other 99% and Occupy Wall Street, in between blaming the Jews for every problem in their lives (and probably fantasizing about furnaces), they’re complaining about bank bailouts and their college loan debt. It’s an odd combination. The Tea Party complained about bank bailouts because they were in support of to good old fashioned Hayek/Friedman capitalism policy. They complained about the size of government because it was against capitalism. They complained about health care because the idea of positive rights is against capitalism. They complained about taxes, regulation, too big to fail all because of one basic reason–all of it’s against capitalism.

The Occupy Wall Street people however are complaining about banks getting bailouts (even though I remember these were the very people who supported Obama…you will recall the right started grumbling during that bullshit that was TARP) because they hate capitalism. So why are they complaining about having debt…oh because they hate capitalism because they didn’t get a bailout themselves. It’s not that they’re opposed on principle to people having money…they’re just opposed to people who aren’t, you know…them, having money. And you wonder why I constantly refer to them as a bunch of whiners.

But let’s deal with their claim that their debt is a problem, a problem the government should fix. Well, technically, they might have a point there if they took the line of argument I made that the government CAUSED the problem by offering loans, grants, and subsidies in the first place. The government caused a bubble in college tuition. It’s their fault. Now if they wanted to end ALL government grants, loans, subsidies and scholarships which would burst the bubble on the cost of college tuition and after and only after ending all the BS forgive all outstanding debt over say $10,000 (because THEY ARE THE ONES WHO CAUSED IT TO BE THAT HIGH) as a mea culpa for truly f!@#ing the system up, I could understand and be in favor of that. However that’s not what Obama is proposing. He’s proposing just forgiving some of that debt. Do you know what that will do? It will make colleges think they can bilk even more in tuition because, hey, it’s not like the kids will ever have to pay it back. Just forgiving debt will drive costs higher, will cause more debt in the long run, and it will even further ruin the educational opportunities of students looking to go to college and put future graduates even more behind.

Everything this administration does boggles the mind. They’re either idiots or evil geniuses. There is no in between. Either they know absolutely nothing about economics, because EVERYTHING they do is the wrong thing (bailouts, corporate takeovers, more regulation, health care, backing unions, everything) or he sincerely wants to destroy this economy . I personally believe Obama and his team to just be the dumbest idiots in the world, but who knows I may be proven wrong. 

But let’s not just focus on forgiving debts and bailouts of losers in this country, because this form of insanity is becoming an international pastime.

Greece is once again about to default on its debt so let’s bail them out again. But this time it’s not just the EU and the IMF (read U.S. money) now we’re adding China. You know how in crime movies they always describe that one loan shark you do not want to owe even a single nickel to because if you do you will never pay it off and you will always be in their pocket. Yeah, China. But more importantly is the simple fact that this is never going to work. Never. Greece is a total entitlement state that spends more than it can possibly take in. And they have shown no inclination to make the massive cuts required (you know kind of like how this country should have started making massive cuts right around the time Enron and Arthur Anderson went under…but Bush knowing nothing about economics, yet still more than Obama, didn’t). But let’s be honest here, Greece is beyond help. They’re going to default. Even if they went for true austerity measures, stopped all socialist policy and instituted Hong Kong style capitalism the economy will not grow fast enough to stop them from going into default. This is just a fact. They passed the point of no return a long time ago. All we can do now is choose whether that default is going to be big, as it is now (we could have made it much smaller had we let them default years ago, but that time is past) or we can choose for that default to be unbelievably massive as another round of bailout after bailout will make it. Greece will default. That is a fact, the only question is now how big do we want to make that disaster and how many of us should go down with her.

But no. Like a the crazy idiot who can’t pay their bills Greece is just going to take out another credit card and put all their new debt on that one. I’m sure that plan will work.

The unfortunate fact is that people, whether it’s the EU or the Occupy Wall Street idiots, don’t want to deal with the facts of debt. Debt is an agreement to pay back what you have borrowed. To socialists who don’t hold property and contract law as sacrosanct this may come as a bit of a perplexing issue, but for the rest of us we understand. In any loan agreement there are two parties. The loaner who agrees to take a risk and loan you money which you will pay back with interest as payment for having the money up front when you needed it but didn’t have it. This person knows they are taking a risk and if they’re smart will not loan out more than they can afford to lose (banks and governments should take a hint). And there is the loanee who thinks that they will do better by taking out the loan and buying something now rather than waiting to have the money and buy it later. It’s a capitalistic act. Both parties make out better. The loaner gets interest on their loan, the loanee gets the benefit of buying something that will benefit them. Each party is supposed to be better off than before (remember capitalism is a win-win system). Now the loaner takes a risk, and they should know it’s a risk, and with any risk you should not throw good money after bad, you should not loan out more money just to get your original investment back. It never works. For the loanee you take on an ethical requirement to pay that money back (and for college students out there, it’s a good investment because you will make more money with a college degree and spend less time unemployed…unless you study Sociology or Modernist Literature, in which case you will rightfully be unemployed and have all day to just sit around and bitch about how life is unfair with other idiots at Occupy Wall Street). If you can’t pay the money back (i.e. Greece, idiots who buy houses they can never afford, U.S. Congress) DON’T TAKE THE MONEY. You’re an idiot to loan money when you can’t afford to, and you’re an idiot to take money when you can’t pay it back. And you’re an idiot and an unethical bastard to say someone else should pay back the loans you should never have taken. But more than just that it ignores that while capitalism is a win-win system where everyone does better on every capitalist transaction, it is also a system about profit and loss. You may do better off of every transaction because you always get what you want; however, what you want may not be in your best long term interest, and if you’re an idiot and make stupid choices based on immediate wants that will lead to your own failure with no one to blame but yourself.

If we bailout people who took out loans on houses they couldn’t afford you encourage more bad home loans. If you bail out people who can’t get a job with their stupid liberal arts degree you encourage more useless degrees. If you bailout banks with bad loan programs you encourage more bad loans. If you bailout businesses with bad growth policies you encourage more bad business decisions. If you bailout countries with unsustainable socialist policies you encourage more socialist policies. Stop bailing out and supporting losers. Every dollar spent on bad policies form the individual to country level is a dollar not going to policies that work, a dollar that encourages more bad choices and less good ones. Stop the bailout and loans by governments which seem to always encourage the worst. Get out of the loaning system, leave it up to the banks, which, as they are convened with profit will only subsidize good choices, and thus subsidize economic growth, and which will be better for everyone. Stop doing encouraging all the things that ruin people’s lives and let them live their lives…not everyone will make it to the top, but it will because of their own choices, not because a government got in the way.

Worrying about people’s debts, especially people who have made bad choices and can’t pay off those debts, worries only helps those about people who have made bad choices allowing them to make more bad choices..and it hurts everyone else. The government seems to have no ability to look at people suffering and subsidize their bad choices…so it needs to leave because all it is doing is encouraging more bad choices. Will this have consequences? Yes. Lots of loans from the personal level to the international level will have to be defaulted on. But the effects of this will be lower prices in numerous fields and capital will be freed up to be given to people who will repay their loans, to people who will invest in education that will lead to a job, to businesses that will grow an economy.

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Filed under Atlas Shrugged, Budget, Capitalism, China, Congress, Conservative, Corporate Welfare, Death, Debt, Economics, Fear, Foreign Policy, Government is corrupt, Government is useless, Health Care, liberal arrogance, Long Term Thinking, Obama, Occupy Wall Street, People Are Stupid, politics, Taxes, Tea Party, Tyranny, Unions, Unjust legislation, Welfare

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