STORY TOOLS

• E-mail story
• Comments
• iPod friendly
• Printer friendly
• News alerts
• Subscribe to the paper
• Submit a news tip

More Opinion Columnists

• Meyerson: Americans are already looking past Bush
• Sowell: Assaults on freedom sound so innocent
• Elias: Heedless votes for bonds dig hole deeper

SHARE THIS STORY [?]

Call me old fashioned, but where I grew up bailing out a boat only works when the boat is still floating. Watching the dark underbelly of capitalism lately, the idea of bailing out some of our lending institutions and investment banks seems to me a bit like bailing out the Titanic: standing on the deck 1,000 feet underwater holding that bucket but not really getting anywhere. Feeling a little short of breath.

Just add it to the list of the many things I don't understand. If I went to the bank with a net worth of $1,000 and asked for a loan of $30,000 for a worm farm (I'm going to grow some really special worms), I don't think they would give me the money. Yet these same banks borrowed capital at 30 times or more their net worth, and their worms weren't all that great. Fannie Mae and her brother Freddy borrowed as much as 1,000 times their net worth, and their worms were dead!

We have met the enemy, and the enemy is us. Conventional wisdom is that living beyond your means is the American way. Yet I know lots of Americans, and I'd say not one in 10 attempts to live beyond their means. Maybe I lead a sheltered life? If we had accountants like the government, my wife and I would be in pinstripes down in San Quentin. I look pretty good in pinstripes, but she thinks they make her look fat.

Capitalism is very popular with these big banks and lending institutions as long as markets go up, but when they head south they run toward socialism. "We're too big to fail." That's like having a patient that's too old to die. I've had a few of these patients over the years. It doesn't work out. The very nature of capitalism includes both success and failure. Yin doesn't taste as sweet without the yang.

So what's my answer? Pretty simple, really. Bankruptcy. I have to admit I read a great column by a Harvard economist last week in the Wall Street Journal, who laid out the case in some detail. Failure creates opportunity for others, and it wouldn't take long to fill the void. Witness the current tussle over the bones of Wachovia by Citigroup and Wells Fargo. For my way of thinking, that's the American way.

Why put the 90 percent of citizens who live within their means down on the Titanic's deck? Most people I talk to want those executives who planned this mess to hold the bucket. And they don't much care if they are short of breath.

Who is surprised that the banks won't trust each other? Can I see a show of hands? Of course there are lots of reasons for the current mess and this brief essay oversimplifies the whole thing, but through the smoke I can see one consistent thing missing. It's not something that you can buy in a store. Honesty.

My kid brother is a college professor. He has his Ph.D. in ethics. I like to tease him that instead of teaching undergrads, he should get a job at Wharton business school. Fill a void. Honesty is really an essential ingredient in the house we call our economic system. With honesty, free markets and free people live in a house of stone. Without honesty, it's a house of cards.

So it seems all the honest people are short of breath. In about a month, we all get the chance to swim to the surface. Crawl into another boat. One without a bucket ... watertight. Is that boat in sight this election season? That's the greatest thing about this country. We all get to choose. Our Founding Fathers taught us to swim, and nine out of 10 of us are real good at it.

Personally, I hope we choose a capitalist boat. I don't want to stay underwater with the socialists. The trick is to find one of those boats with an honest captain. One that lets us win, or lose, on merit. You see, I've got these talking worms ...

Record Searchlight contributing columnist Richard Malotky can be reached at getoffyourbutt@msn.com.