The irony in this editorial cartoon is excruciating.

taxpayer

The cartoon describes the situation perfectly, and quite profoundly as well. Banks have drowned themselves in bad debt, and those that were irresponsible are calling out for the government to save them from their own stupidity. They are requesting for privatizing whatever profits they have gained in the past, but socializing their losses now to us through the forceful arm of the State. And because the government is quite friendly with these folks, it is quite willing to go through with the plan.

Look at the cartoon again, think about how the events will unfold. Eventually, the water level will get below the valve and no more will go through. What will happen. You guessed it, both will drown.

A friend opined to me recently how these bailouts are like business-Viagra. But you can’t give Viagra to someone terminally ill and expect them to be “stimulated” (pardon the semi-crude statement), in fact it will probably make them worse. Likewise, you can’t absorb debt like this and expect no consequences. Sounds like another political cartoon in the works…

Hat tip to Chris and Young Americans for Liberty for posting this.

Dr. Norman Horn

Norman founded LibertarianChristians.com and the Libertarian Christian Institute, and currently serves as its President and Editor-in-Chief. He holds a PhD in Chemical Engineering from the University of Texas at Austin and a Master of Arts in Theological Studies from the Austin Graduate School of Theology. He currently is a Postdoctoral researcher in Chemical Engineering at the Massachusetts Institute of Technology.
  • Darwyyn

    Excellent article and cartoon! Also nice redesign on the site Norm :)

  • Darwyyn

    Excellent article and cartoon! Also nice redesign on the site Norm :)

  • Josh

    The whole reason these banks are stuck with bad debt is because tax-payers were drowning in their own debt already. But, not content to let them drown by themselves, we had to bring the other tax payers into it and try to drown them too. See, much of Washington noticed that there are some of us who kept our tanks relatively dry (borrowed responsibly). Washington then decided that they should spread the (negative) wealth around to ensure that everyone was drowning, knowing that those people that had kept their tanks dry would continue to work hard until their tanks were dry once again.

    Really, as logical person, this makes sense on one level. If you have resources (industrious tax payers) that are not being fully utilised (not paying off crap loads of bad debt), you should put them to work (give them some debt).

    Of course, there is another issue here and that is, the more tax payers that drown, the more water there is in the bank’s tanks to let flow over to the rest of us and the more prone we are to drowning.

  • Josh

    The whole reason these banks are stuck with bad debt is because tax-payers were drowning in their own debt already. But, not content to let them drown by themselves, we had to bring the other tax payers into it and try to drown them too. See, much of Washington noticed that there are some of us who kept our tanks relatively dry (borrowed responsibly). Washington then decided that they should spread the (negative) wealth around to ensure that everyone was drowning, knowing that those people that had kept their tanks dry would continue to work hard until their tanks were dry once again.

    Really, as logical person, this makes sense on one level. If you have resources (industrious tax payers) that are not being fully utilised (not paying off crap loads of bad debt), you should put them to work (give them some debt).

    Of course, there is another issue here and that is, the more tax payers that drown, the more water there is in the bank’s tanks to let flow over to the rest of us and the more prone we are to drowning.

  • Norman

    Josh: Banks are stuck with bad debt for many reasons, most of which have their root in government policy. First, the government through Fannie Mae and Freddie Mac provided perverse incentives for banks to lend assets to potentially disastrous borrowers. Second, artificially lowered interest rates through the Fed make it more attractive to borrow money for more risky endeavors. Third, fractional reserve banking policy makes it so that more money is lent out than actually exists in the first place, further exacerbating the problem of perverse incentives and artificially lowered interest rates. Fourth, the banks then further socialized the losses through near-fraudulent means (Collateralized Debt Obligations). They finally complained that they weren’t making money hand-over-fist as the bad investments are revealed in the marketplace.

    Under a truly free market, the banks would not be able to lend out what they don’t have, and they won’t have incentives to make idiotic loans. Thus, any errors that do happen will not spiral out of control because the market can correct itself quickly. As it is, this is impossible, and only pain will result.

    You said: “Really, as logical person, this makes sense on one level. If you have resources (industrious tax payers) that are not being fully utilised (not paying off crap loads of bad debt), you should put them to work (give them some debt).”

    I don’t think I can agree with you on this. Doesn’t your statement assume that those resources belong to someone other than those who earned them? Wouldn’t forcing those resource owners to utilize those resources in ways they would not normally choose be immoral? And furthermore, how is giving them debt putting them to work? Sounds more like punishment or slavery than a good idea. And like you said, there is also the secondary issue of basically dragging the responsible into the drink with the flailing…

  • Josh M

    I was refering to the government using the tax payer as a resource. By taking on the debt of the banks and ultimately paying for it with tax payer money, they are requiring those of us who where not already bearing the burden of the debt to pay a part (putting us to work on paying it down through higher taxes that will surely come). When I said that it made sense to me on one level, it was as if I were only interested in the survival of the government and the banks.

    I am very much against this whole thing.

    I also agree with you on the source of this whole issue, Government intervention with the banks and financial industry.

  • Josh M

    I was refering to the government using the tax payer as a resource. By taking on the debt of the banks and ultimately paying for it with tax payer money, they are requiring those of us who where not already bearing the burden of the debt to pay a part (putting us to work on paying it down through higher taxes that will surely come). When I said that it made sense to me on one level, it was as if I were only interested in the survival of the government and the banks.

    I am very much against this whole thing.

    I also agree with you on the source of this whole issue, Government intervention with the banks and financial industry.

  • Norman

    Ah, I got it now. I was wondering if I was misunderstanding you somewhat. Thanks!

  • baroness.fel

    When the water gets below the valve, sure both will drown. However, the banks will still be in over their heads while the tax payers just up to their eyebrows- unless the drawing is not to scale. ;)

    Nice picture representation though. I was thinking about printing it as a coloring page for my Thursday morning childcare for Women’s Bible study class. It’s never to young to start- though their parents and my co-workers might not be too happy with me…

  • baroness.fel

    When the water gets below the valve, sure both will drown. However, the banks will still be in over their heads while the tax payers just up to their eyebrows- unless the drawing is not to scale. ;)

    Nice picture representation though. I was thinking about printing it as a coloring page for my Thursday morning childcare for Women’s Bible study class. It’s never to young to start- though their parents and my co-workers might not be too happy with me…

  • RedRiot51

    Excruciating, to say the least, and as a recently married man (just over a year) who lives overseas and has little if no debt, my subsequent move back to the U.S. is frightening as I’ll inevitably have to pay my unfair portion of these bail outs, although I do plan to save money. It’s a very frightening prospect for someone in my situation.

    RedRiot51

  • RedRiot51

    Excruciating, to say the least, and as a recently married man (just over a year) who lives overseas and has little if no debt, my subsequent move back to the U.S. is frightening as I’ll inevitably have to pay my unfair portion of these bail outs, although I do plan to save money. It’s a very frightening prospect for someone in my situation.

    RedRiot51

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  • Heh heh. Funny cartoon.
    Opine is the word of the week? It’s a great one.

  • Heh heh. Funny cartoon.
    Opine is the word of the week? It’s a great one.

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