Thursday, January 13, 2011

Bankruptcy

Some of the soapster's most recent comments about Big Government got me thinking and instead of directly responding to his previous remarks I thought I'd do a blog about how far back the problem really goes and today we're gonna focus on this thing called Bankruptcy. Now I always have First Impressions of everything, gut feelings, call it my Primeval Conservatism at work and if you provide a good or service for somebody and you don't get paid and that person or company or corporate entity does not have to pay you after hiding behind a bankrupty filing well that just seems immoral and unjust to me. Of course your initial reaction can me modified by other factors as I feel credit-card companies charge usurious (there's a word you don't hear anymore) interest rates and so the person legitimately trying to pay off his debt gets shafted. Now I'm no lawyer and don't know all the intricacies of bankruptcy law, there's this chapter and that chapter and a few subclauses but you take a large company that has gone into 3 billion dollars in debt let's say and then they get protected by the Bankruptcy Court and get a chance to reorganize their gangster outfit and even get a bailout or loan for their troubles. Well HOW exactly did they go 3 billion dollars into the hole in the first place? At what point in time did nobody notice what was going on? Where was the company auditor in all of this, asleep at the switch? Was there corruption, were honchos putting their hands in the till? The people who were responsible, have they been held to task and if need be prosecuted or at least told to look for other work? Well in our fictitious example (or maybe the better word is factitious) all these questions become moot as they in effect get rewarded for their past bad behavior. Now I have a few philosophical issues with Ayn Rand but at least in her vision if a company deserves to go out of business they deserve to go out of business and in a pure laissez-faire marketplace system businessmen would be forced to be more careful and then there's the question of how is a bankrupt company gonna pay off a government loan (well actually a bank loan but the government is somehow involved as always)? So a couple of immoral things have happened, the vendors who provided certain goods and services won't get paid and the company gets rewarded in effect for their past bad, irresponsible or even corrupt behavior by getting a loan because it's been deemed by Big Government they're too big to fail.

The Republicans "reformed" bankruptcy laws, the Dems want to swing back but I say we need to start at Square One again. IMO it's the bailouts that drive the Tea Party. I give you something, you don't pay me and the government protects you and even arranges to get you more money. If you don't see the dysfunction here then you're not a true conservative, maybe a neocon at best. President Obama in his speech at the AZ Memorial Service spoke briefly about what he called "the forces that divide us." Well no Mr. President it's the forces that disagree with you and your vision of what government should be but this old old polemical device seems to be a favorite of his. So in effect we are left with failing companies that have run their course, should be out of business by their own doing but are being propped up by the government. Remember when the Five & Dime (Woolworth's) went out of business? THAT'S the natural course of events or used to be and it may be Destiny's way of telling you you need to be doing something else with your life, accept it. The Question Before the Board today: should we get rid of ALL bankruptcy laws?:)

10 comments:

  1. Dems did in fact change the history of bankruptcy case law when they shafted the creditors in the auto bailout.

    ReplyDelete
  2. I'm ambivalent about bankruptcy. In many cases my heart goes out to those who file for bankruptcy and yet it doesn't seem right that people don't get paid. Anger over bailouts is what drives the Tea Party, this is how they began and it angers me too. You said elsewhere what will it take for the people to rise up. Well if you had millions of Americans refusing to pay income taxes they couldn't put us all in prison but the problem is you don't have that Spirit anymore. You and a few others would be the lone oddballs not paying taxes. There is not enough likemindedness in this country to rebel.

    ReplyDelete
  3. Here's a philosophical dilemma. Let's say you work for a company that gets bailed out, you still have a job but somehow it doesn't seem right to you. You might even suspect shady goings-on. I'd say in such a case it would have been better for the place to go under, this is more in keeping with morality. You look for another job, it builds character all around and hopefully people can learn from it trouble being more people in such a place are just happy to have the job and don't look into it further. This is how more and more people become more pro-big government over time, from a practical angle they're making out and true libertarians like us look like dinosaurs.

    ReplyDelete
  4. I believe in giving people second chances, but having safety nets that reward excessively bad behavior makes no sense, and gives no incentives to act responsibly.

    I am reading Glenn Beck's "Broke" and the history of welfare is one of buying votes, and is a history of incentivizing bad decisions because like a drug dealer giving you stuff to get you hooked, then the Democrats have got voters hooked on the free stuff. I would think that bankruptcy laws do the same thing, because basically mistakes are too easily wiped away and rewarded, so nobody will ever change those laws for fear of losing votes.

    ReplyDelete
  5. You have companies and corporations today that should simply go under but the government keeps propping 'em up. The natural course of events is or used to be if you're a sucky/corrupt businessman your company deserves to go under and bailouts interfere with all that not to mention the taxpayer has no damn say in the matter. Heard Beck just wrote a book with Dr. Keith Ablow.

    ReplyDelete
  6. Yeah, I want to get that book Glenn and Dr. Ablow wrote, too! When does Glenn sleep? He is always writing books on top of his stage shows, his radio show and his TV show!

    The ironic thing about propping up these business I think is that some believe in survival of the fittest and evolution, but they won't apply the same to businesses that as you said should fail.

    ReplyDelete
  7. Republicans are just as guilty of getting certain constituents hooked on "free stuff".

    ReplyDelete
  8. You know first hand, Soapster.

    ReplyDelete
  9. On the campaign trail, I never promised anyone anything more than securing for them their liberty.

    ReplyDelete
  10. As to your comment Beth about those who believe in evolution but don't want to apply it to the business world, this is uncanny but I had the same thought. Now getting back to our example of the company $3 billion in debt who files for bankruptcy protection and gets say a loan of several hundred million dollars, here's my thing: JUST HOW IN HELL IS A BANKRUPT COMPANY GONNA PAY OFF A MULTI-MILLION DOLLAR LOAN(WITH INTEREST)? Say your friend went flat broke and filed for bankruptcy would you loan him say $50,000??? No wonder the Tea Partiers are so angry!

    ReplyDelete