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Posted: 8/27/2002 7:49:55 PM EDT
Here's the deal, guys: I'm running for congress as a Libertarian, but unfortunately I've been thinking about fun things and/or my job for the last couple years and not ever watching the news. So I go to my first forum last week, and some guy stands up and asks me how smaller government would have prevented the Enron mess. And I'm like, "En WHAT?" I know there are some Libertarian types lurking here, so help me out. Input from any normal people who know about this subject would be appreciated as well. Yes, I know this is really pitiful. Especially when you consider that I'm the best candidate.
Link Posted: 8/27/2002 8:10:27 PM EDT
[Last Edit: 8/27/2002 8:33:13 PM EDT by raven]
The only way I could think smaller government could prevent Enron-type frauds is that the law turns its back to vigilante justice by burned investors. Seriously, I think one way smaller government could help prevent Enron fiascos and other crises is by refusing to bail out the bad loans made by private corporations. These big banks like JP Morgan and Citigroup make big loans to 3rd world countries and corporations like Enron at high interest rates to seize a premium for the higher risk. Yet when the loan goes south, the bank runs to the government to bail them out, claiming it's in the national best interest, since not bailing them out would cause a credit crisis. We saw this happen to Brazilian debt to the tune of $30b this month. It wasn't so much to help Brazil, but to help Citibank and JP Morgan. Citi and JP Morgan. You know, those guys who recommended and underwrote worthless dotcom IPO's, hyped them to the public, in order to create a market in which to dump their worthless paper? On top of that, we're bailing them out of risky loans on which they receive premium interest rates to compensate for risk.....except there is NO RISK, BECAUSE THEY CAN COUNT ON THE US TAXPAYER TO BAIL THEM OUT! It happens every single time. As a Libertarian running for Congress, you can prevent future Enrons, by letting reckless lenders like Citigroup and JP Morgan eat their losses and not depend on the taxpayer to bail them out. When they win, nothing goes to the taxpayer; they take all the profit. But if there's a loss? We're expected to eat it because Citi/JP Morgan/LCTM is "Too Big To Fail". If we allow these banks to fail and go under we can discourage future reckless lending in the future. Willing borrowers will definitely be hurt, but in the long term it will be cheap. Enron's downfall was mainly because of its blatant fraud and miscreant business practices. Much of its "income" was really cash loaned to it by banks who believed Enron executive hypesters and their partnership ventures pitched to big banks. The big banks were greedy and/or stupid enough to fall the pitches, and should completely be accountable for their decisions; they should not expect public bailouts. If they allowed to fail and suffer the consequences, future directors of lenders and borrowing companies will be hemmed in by the market and owners of the corporation, rather than government oversight. This is far preferable to me. No one enters into a deal expecting to lose money, and if they aren't counting on a public bailout and know they are accountable to the board for bad decisions, they are more likely to be cautious and not make bad loans.
Link Posted: 8/27/2002 9:38:52 PM EDT
Link Posted: 8/27/2002 9:46:35 PM EDT
Enron, in simple terms: A company practiced corrupt business practices. Their investors were either too uneducated or too greedy to see the writing on the wall. Their employees broke the #1 rule of investment (never keep all eggs in 1 basket) The market found out about the corruption. The market handled the corruption, the stock plummeted, and the company went out of business. Capitalisim at it's finest, and another bad seed out of the mix. People will be more careful next time...
Link Posted: 8/28/2002 10:14:04 AM EDT
Hey, thanks guys. Especially raven. He seems to be operating on a level somewhat over my head, but I get the drift of it. And if I can talk like that, nobody in the average audience is ever going to know whether I actually have a clue what I'm talking about of not. As far as talking to the wrong people, I live in a very Democrat district. And, while I try to present a broad Libertarian approach to all issues, the foremost reason I run is to discourage my wobbly Democrat congressman from voting for anti-gun laws. And the only way I can do that is to consistently go where he goes. He's got to think, "Hmmm, Fuzzbean was everywhere I went in 1998, and in 2000, and now again in 2002. The guy's a goofball, but I know he hates gun control and it's the one issue he knows about and speaks well on. If I vote for this gun control bill, it's a CERTAINTY that he will be there dogging me and embarrassing me every step of the way in 2004. I think I'll pass. Come to think of it, I'll call up the party leadership and tell them it's not such a great idea to bring this up for a vote at all."
Link Posted: 8/28/2002 10:35:00 AM EDT
[Last Edit: 8/28/2002 10:40:31 AM EDT by CITADELGRAD87]
All above are correct. You can't explain Libertarianism to a guy wanting to know how the government is going to protect him, the poor, the elderly, etc. Well, you can explain it, but he's not going to like it. That's the whole point: the MARKET handled ENRON. This thing really burns me. You've got ENRON boosters out there talking about how much the company is doing, so the stock should be worth lots of money. You've got investors buying this stock, IGNORING the common indicators of stock value. Why? GREED. They thought they knew better than conventional wisdom, and were going to get rich. They didn't, tough, that's how the market works. These "poor" workers who lost all of their savings because of a selling "freeze?" Puhleeze. They held their stock until it tanked to something like $3 a share, it had ALREADY lost 90+% of its value, THEN, and ONLY THEN did the company freeze their holdings. They were already broke. Look, the American dream is that any one of us can get rich. The corollary, which we don't like to think about, but which is NECESSARY to enable the dream, is that not everybody can get rich, in fact, the vast majority will NOT, ever, get rich. Some people will lose money.
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