September 23, 2008

The Other Side of the Bike Shed

I've long used the C. Northcote Parkinson bicycle shed discussion example to try to focus on the big issues, and suspect I may have been the one to introduce it to comp.lang.python (though someone with superior google-fu would have to confirm or deny that assertion).

It's always a temptation to expend most energy on the issues we feel comfortable with, and rush the discussions on the areas outside our area of competence even though they are the ones we should rationally spend time discussing, grappling with issues and trying to understand.

The current Bush administration proposal, on which they demand action from Congress within a week, sees the other side of the bicycle shed. Urgent action is alleged to be needed, and it seems that many in government are prepared to rush a decision through because they don't really understand the issues.

The fact remains that it's an unconscionable bid to bail out the fat cats whose corporate greed, with the connivance of the SEC, sent the economy down the shitter in the first place. Personally I'd rather see the discomfort spread about rather more democratically, with those who have been making money from their investments in ill-advised mortgages now taking losses still not comparable with those of the often innocent borrowers who are losing their homes by the thousand.

Remember, the value of your investments can go down as well as up.


Doug Napoleone said...

While I agree that it would be nice to have those who put us in this mess (and even those who supported them via unwise investment) take a hard fall, that is not what will happen.

There are two (massively over generalized) axioms at play here:

1. Action's (and inaction's) have consequences well beyond what is obvious.

2. Life's not fair.

Those who are most directly responsible for the mess are getting 35Mil bonuses even before their golden umbrella's open, while my parents retirement fund (which they are living off of) tanks. They invested quite wisely and conservatively, but the turmoil has spilled over into all markets, and all countries.

I'm not saying that the proposed bailout is the best solution. I, like the majority of people, find this level of economics just too complicated to know what the effects will be to those affected.

Doug Napoleone said...

Of course there are those who are much smarter than I, whom I have respect for, who have voiced opinions:

Not buying it

Would prefer to see some actual research, numbers, and supporting arguments based in facts. Still can't find any of those... Without them it is all just speculation.

ScW said...

I love how in your mind the borrowers "often" are innocent...

I'm against the bailout because the people who are truly going to get screwed are those of us who pay our mortgages and taxes... and our tax money is going to be used to help both stupid businesses who issued stupid loans and stupid people who took loans they couldn't afford. Irresponsible behavior shouldn't be rewarded.

Steve said...

@doug: Well, I guess you can out me down as Not Buying It as well. If you believe in free enterprise that has to include the freedom to go bust.

@scw: I regard the borrowers as "often" innocent because many of them were duped as to the true nature of the loans they took out, and were simply happy to be offered a chance to get on the property escalator. Those who had the brains to work out that a thing that looks too good to be true usually is should be less surprised at the consequences. How one distinguishes between the two I don't know, but given the choice between helping a struggling householder and a struggling merchant banker I'd take the former every time.

PS: Is it true that the collective noun for bankers is "a wunch"?

Doug Napoleone said...


I am not claiming that I buy it either. I am just saying that I have _no clue_ what the end result will be and to whom if the bailout happens or does not.

While I agree that in a pure free economy letting everything things go bust as they should is the best option. But it is a lie to think that we have a free economy. We have state funded monopolies, semi-regulation, etc, etc. There are numerous forces at play.

One thing I have learned is that things don't go bust. Not in the way one wants them to go bust. The bank backers will get more money, and are in a win-win situation no matter what happens. The people who run the investment banks will have golden parachutes and will be just fine. I know a number of home owners who just don't care and go with having bad credit and declare bankruptcy in some cases. Not pleasant, but not as bad as one might think.

The one holding the bad in most cases is me. My property value plummets, my investments (which are in completely different markets) are harmed. My taxes increase (because the town and state were idiots in their investments). The list goes on.

For the record, I do not see how a bailout for the bankers will in any way help with any of this. I don't see how letting things fail will help with any of it either. I can see how both options will make things worse for me. In the end that is what matters most; what effect this has on me in both the short and long terms. I don't see how anything can get us out of this mess.

Those were the points I was trying to make.