My colleague and i were discussing the problem of the Fed rescue net. it started with the discussion of Bear Sterns. 

As we all know Bear Sterns had a bit of a rough time… oh that’s right they are gone in a fire sale. a spectacular bonfire that consumed one of the biggest firms we had in the US.  it is my opinion that Bear could have actually pulled this gambit off, but just too many people were betting against them. that is ok. that is how risk works. c’est la vie.

my issue is actually with the Fed coming in to bail them out. now that we bailed them out, who do we bail out next? everyone. the Fed has to, they lost the choice to say: you dug this hole, climb out on your own. now every company and financial institution that finds itself exposed to too much sub-prime risk, will feel that it is “entitled” to help from the government.

my problem: what ever happened to personal responsibility? why do we, the tax payers, end up paying for every person that chose to defy logic and buy a home that they couldn’t afford? if they couldn’t pay the debt, it was supposed to reflect on their credit score and hence, how trustworthy they are. now they don’t even have to learn the lesson that is supposed to come from being burned. they don’t learn, because they know that the Fed is the safety net, they will always be bailed out.

This is not to say that someone can’t help them. if another institution wants to help that is fine! that is great. but, the Government can’t do this. it is only prolonging our misery. we are a democracy! not a Socialist regime! WE are the ones paying for all of this, that is the thing to remember when the Fed bails these people out.