Economic Forest Fire -

I think we all know the old economic maxim that "a recession is when your neighbour loses his job; a depression is when you lose your job." This is a very insightful saying because it emphasizes the double standard that we all live by.

This is no more evident that in the recent "bail-out" programs that the US and other governments have been implementing.

The U.S. as an example, has provided bail out money to
- banks and investment houses that were clearly the cause of their own problems and the cause of ours by worrying more about fees and money than good business practice;
- automakers that can’t make money in good times and want to be subsidized through the bad times;
- and now homeowners who are threatened with losing their homes. Homeowners who enjoyed the benefits of rising real estate prices, and are hoping for government assistance when the bubble inevitably bursts.

Most economic experts say that these bailouts are essential to keeping us out of an even greater economic disaster. But the average man on the street who is meeting his obligations doesn’t appreciate his government’s money...his money after all...being used in the Trillions of dollars to help these people who are largely the cause of their own downfall.

Morally they are right we think. But there is more to the story. Economic recession is like a forest fire. If you do nothing and let your neighbour’s house burn, there is a high chance that the flames will spread to your house. We don’t really care if our neighbour’s house burns if he has acted recklessly and that was the cause of the fire. But we have to take every precaution to make certain our house does not burn and that includes putting out the fire on his house.

So it is not altruism that motivates us in fires and it is not altruism that must be considered in these bailouts. It is self-preservation.

No one likes these bail-outs (except of course the recipients). So as much as it irks me, until we find a better plan for putting out the economic inferno we are facing...and I for one, haven’t heard anyone propose a better plan...I won’t learn to like it, but I will continue to pray that it works.