Where Brad and Britt Are Wrong

The boys over at WZTK are at it again.  This morning they are talking about Obama reducing the pay of executives whose companies took money in the bailout program.

Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in federal bailouts, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives, an official involved in the decision said on Wednesday.

Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the annual salaries of their 25 best-paid executives by an average of about 90 percent from last year. The executive’s total compensation — including bonuses and retirement contributions — will drop, on average, by about 50 percent. The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.

The conversations mostly centered on the fact that it was these big companies executives fault that the economy has gone through this latest recession.  And, as such, these executives should “suffer”.  Or, at the very least, should not continue to reap the rewards of their position by continuing to make all of this money.

I completely resonate with the concept of reward by performance.  I think that bad teachers should be fired.  Bad lawyers not be allowed to pass the bar.  Bad soccer players not make the team etc etc.  But the idea that we somehow cede this normal working of things to the government to satisfy the political need of the day is very very dangerous.  Very.  Not to mention it may be illegal.

However, the part that really got me going was the inevitable conversation surrounding the cause of this whole mess; the housing bubble.  The boom and bust.  The left just SCREAMS when anyone suggests that government regulation is responsible.  That somehow, by passing laws and creating rules that force people to do what they normally would not do, isn’t going to disrupt the market, always in ways that are unforeseen and undesirable.

For example, if a friend or family member asked to borrow $100 I would enter into that arrangement.  And prolly for free.  That is, I would give them 5 twenties and if they gave me a hundred bucks later, we would be “even.”  No juice or interest.  Now, if I were in the business of selling money, I would want to see some reward to hand money out.  This comes in the form of interest.  Soo I begin to borrow money to people.  Sometimes I get all of my money back with interest.  Sometimes I get most or some of my money back and then sometimes I don’t get any money back.  I begin to try to figure out what characteristics trend to me getting paid back.  I really want to lend only to those people who are going to pay me back [crazy talk, I know!  Wanting my money back.]  However, I am not the only money seller out there so I have to compete, in terms of lower interest rates, with other firms.  This keeps my profits down.

Now, a guy walks into my office and says he would like to borrow $100.  I say nope, the 5% interest isn’t enough to overcome my doubts that you’ll repay.  He looks at me and says, well, how high of a rate do I need to agree to before your fears are overcome?  I say 8%.  He says okay.  And now I sell money to another group of people for 8%.  And so on.  However, there is a group of people who I will not sell money to under any condition.  Just won’t do it.  Will not.

Enter the Libtard.  They claim that it’s not “fair” for me to deny lending opportunities to those people.  And because they have the power of law and fiat, they create rules and laws that force me to make a set % of my loans to these people.  Because I enjoy paying my mortgage and feeding my family, I comply out of fear they will put me out of business.  And low and behold, these people begin to default and I start losing money.  No one is surprised.  I sure ain’t.

And this is the beginning of the crisis.

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