Reaping what you sow

Every other blogger in the world is putting up their 2 cents on the US financial sector crisis, so I figured I might as well post mine, too. It boils down to a pretty simple philosophy - as you sow, you should also reap.

The basic problem here is that people made dumb choices. Some of them were fooled (a lot of the adjustable-rate mortgage crowd were sold a bill of goods by their advisors). Some of them did it on purpose (many of the investment bank firms that 'leveraged' their assets into ridiculous amounts of debt). But all of them made bad choices.

If you make a bad choice, you're going to have consequences down the road. It might be losing your house. Or your job. It might mean that we all have to tighten our belts and go without some of the comforts of modern life.

Yes, I said "we". Even though I personally (and possibly you personally) didn't make all these bad choices, we're all going to suffer to some extent. And that's life in today's highly-connected world - no one decision completely stands alone, it all affects others. But the ones who fall hardest should be the ones that made the bad choices in the first place.

That's why I'm glad the "bailout" plan failed. If the government is going to get involved (and I'm still not sure that's a good idea in the first place), then they shouldn't be putting any money or time into fixing these "toxic loans".

What's the other option? Put the taxpayers' money into creating alternatives instead. Set up some public sector works for people that lost their jobs. (How about alternative energy production? Kills two birds with one stone.) Buy up some homes (not the loans on them, the homes themselves) at the current low prices and rent them out to people that can't pay their ARM loans (after they lose their home to foreclosure, probably - that's their punishment for a bad decision).

There's lots of ways that we can let the instigators of this current finance crisis fall without allowing it to affect everyone. But the key point is this - we have to be willing to let the people that made these bad decisions reap the results.