Financial Bailout

Bush League Money Problems

Phil’s posture was worse than ever.

His shoulders were a little more hunched, head even more bowed, and legs a lot wobblier than usual. His tired and dreary shuffle had gotten to the point where his feet were actually carving long slide marks into the hard tile floor.

Not even my usual—and always successful—method of cheering him up worked. He refused the warm can of discount beer, and didn’t even look at the women’s underwear catalogue that I held open down in front of his face.

“What the hell is wrong? You down to your last half-gallon of whiskey?” I growled.

“Way worse than that,” he mumbled in reply.

“Jeeze! The wife has decided to stay married to you!”

“Worse. I’ll probably lose everything—the car, the home brewing equipment and the bowling ball. I’ve been irresponsible with my money.”

“Irresponsible? Have you been giving to charity again?”

“Hell no!”

“Buying clothes for the kids?”

“No.”

“Investing in 'socially responsible' companies?”

“Nooooooo!”

“Then what?”

“I’m in debt—credit card debt, the mortgage, the second mortgage for the bill consolidation, back income taxes to the feds, back taxes to the state. It’s a mess. The cars are starting to go and I don’t know how I’ll pay to get them fixed. The interest rate on the mortgage is high, but I can’t get it down because no one will refinance me because my credit is so bad. I’m just going to go under.”

“How much do you owe?”

“Forty-five thou’ on the mortgage. Fifteen on the debt loan and maybe five on the credit cards.”

“So a total of sixty-five, maybe seventy thousand?”

“Yeah. I can’t keep up. I can’t make the payments. Bill collectors keep threatening me. The IRS is after me. They’ll probably slap liens on the house. And worse, Louie at the tap won’t give me credit anymore. Can’t even get a pitcher of beer when I’m out of money.”

It didn’t take long to truly understand Phil’s problem and to gently and sensitively recommend a solution.

“You’re an idiot,” I said.

“That I know.”

“But not for the reasons you think. Your problem is that you’re not in debt enough! You don’t owe enough money. Seventy grand is worse than chicken feed. It’s nothing. The reason those bill collectors and the IRS are coming after you is because you’re inconsequential to the national and the global economies. If you fail and go under, no one but you and your family will really be hurt, and no one but you and your bartender will care. So they hound you for the little money you owe them.

“You want to get these people off your back? Hell, want them to offer to bail you out when you go bust, just like they bail out all those billion-dollar hedge funds and Bear Stearns? Want the federal government, every bank and every pandering politician to throw money at you? I mean, throw money at you?”

“Yeah. But how?”

“Go out and borrow more money. Borrow so much money and get into so much debt that even computers won’t be able to count it all. Borrow tens of billions—even trillions—of dollars. Borrow more money than anyone or any company or any government has ever borrowed ever in the history of ever.

“And then, and here’s the key, mismanage and waste all that money. Put it into reckless and irresponsible investments. Hell, buy yourself a light beer brewery.”

“How do I do that?”

“Pretend you’re a government official or a politician.”

“Then what?”

“Default on your loans, declare that you are hopelessly insolvent and that all those trillions of dollars are gone.”

“Won’t they put me in prison?”

“Hell no. Prison is for petty borrowers like you and me—people who owe almost nothing. No. They won’t throw you in prison. You know what they’ll do to you if you mismanage and waste trillions and trillions of dollars that aren’t yours?”

“What?”

“Give you more money!”

“They’ll give me more money?”

“Yeah. The government just found billions to bail out Bear Stearns, a Wall Street financial firm that was going kaput. A bunch of years ago the feds brokered a billion-dollar deal to rescue an incredibly risky hedge fund that was failing because of risky and irresponsible investments.

“And you know why they threw money at these frauds and crooks? Because they couldn’t afford to let them fail. If these people and companies collapsed, the world’s economies would collapse. So rather than throwing them in prison for being crooks and frauds, they give them more money.

“The key is to make yourself indispensable to the world’s economies. You do that by owing everybody money. If you owe enough and are indispensable enough, they can’t let you fail. Now go out and borrow the money you’re entitled to.”

Phil bucked up after the short lecture and lesson on global economics. He popped the beer and paged through the underwear catalogue. He shuffled off in a much better mood.

A couple of months later Phil had undergone a total transformation. He stood up straight. There was a bounce to his step. He no longer needed underwear catalogues because he had svelte, scantily-clad babes on each arm. Giant diamond rings weighed down each and every one of his fingers. He puffed hundred-dollar cigars, sipped the world’s most expensive whiskey and said that he had recently paid $25,000 for dessert at a New York City restaurant.

“So you went out and borrowed money?” I asked.

“You damn straight.”

“How much?”

“Well, a few weeks ago I was worth a couple of trillion. I almost bought myself a turnpike, but decided on cigars instead.”

“You were worth a couple of trillion?”

“Yeah. Lost it all. Made the stupidest investments ever. Sunk trillions into canal building and horse-and-buggy factories.”

“But canals and horses and buggies are obsolete. No one uses them.”

“I know. I just wanted to test your theory. It works. I wasted all that money, and now they’re all throwing more money at me. They won’t let me fail. They’re running the printing presses full time just to bail me out. They say I’m the biggest money waster the world ever has seen, or will ever see—a total fraud and incompetent.”

“And based on that they now want you to?”

“Run for president!”