Sunday, September 28, 2008

No friends of capitalism

The following letter went to my congressmen at the end of last week. Should another "bailout" plan be proposed which, while smaller in total dollar figure, differ little in principle then subsequent follow-up letters will be sent.

I urge you if you have not done so yet, to do the same!

Dear Sir:

As Congress considers a bail-out provision totaling over $700B and which could run higher, please reconsider any decision to vote for this sort of proposal in any way.

What the country needs now is not the govt granting broad reaching, unchecked powers to the Department of Treasury so that it can spend taxpayers money to buy up bad paper and greater than market prices. Such a measure will not save the economy but plunge it further into crisis. It will not punish those executives who made poor decisions while saving those who were smart. It will treat all equally.

What the country needs now is for the govt to provide an orderly mechanism to allow banks to liquidate assets as needed to solve their liquidity problems. That mechanism exists under the rule of law already. It is known as Chapter 11 restructuring. The free market, a truly free market must be allowed to work to clean up the mess, which ultimately has government intervention in both monetary policy and the mortgage industry at the heart of its cause.

Today John Allison, CEO of BB&T, one of the largest commercial banks in the country articulated the principles by which government should behave in a letter to all of Congress. I agree wholeheartedly with his assessment and urge you not to vote for any sort of bail-out plan.

I have generally voted for you and the Republican party party in the past; however, your vote for such a plan now will irrevocably change my future vote. This action will be akin to the disastrous aftermath of the 1929 crash whereby government attempts to solve the financial problems they created only made them worse and caused a protracted Depression. The Democrats were no friend of capitalism in that time, and should this measure pass with Republican approval, then I will have to conclude on principle that the Republican party is no longer a friend of capitalism either.

Respectfully yours,

Kendall Justiniano

No comments: