With hat in hand

What really irks me right now, at least with regard to our growing economic and financial turmoil, are the barely disguised ploys some entities pursue to avail themselves of Federal bailout money.

Consider the insurance companies (that shall remain nameless, although their identities can be discovered easily) that purchase banks in central Florida and elsewhere, and then apply for bailout funds; the insurance company did not need it, and it is arguable whether the bank needed the money, but who can turn away free money with few strings. And today's edition of the Wall Street Journal reports that, just as Detroit's auto makers seek aid in Washington, Michigan's biggest health insurer is arguing that it too needs a rescue of sorts.

"Blue Cross Blue Shield of Michigan has asked state lawmakers to give it more flexibility over the premiums it charges, reduce regulators' power to intervene and toughen regulations for its rivals. If the not-for-profit insurer's controversial plan succeeds, the Michigan insurance market for individuals -- one of the most affordable in the country -- will be revamped. Blue Cross says the changes, which could be voted on as early as this week, are necessary to curb the mounting losses that result from its status as the state's insurer of last resort. But the company's push has sparked a political showdown with the state attorney general, for-profit insurers and consumer groups."

Huh? Excuse me while I retch. Can the people behind these schemes truly believe that Federal officials are so stupid as to buy into their con games? Becky Antworth published today an op/ed essay, "With a Detroit bailout, the Fed may become too invested to quit," that really is quite brilliant in its quiet, unassuming way...

"Whether for or against, both sides of the debate have been using slippery slope arguments to defend their view. On the wayward side, the argument goes, a Detroit bailout would spark a frenzy reminiscent of fish pellets in a carp pond. Credit card companies will demand a share; whole cities are already holding up cupped hands; makers of the dog polisher, mesh raincoat, and electric banana straightener will need some help. On the leeward, let the auto industry slip into oblivion and myriad other industries will tumble down after it. Before long, the entire economy will be in a heap at the bottom. The aftermath of either scenario looks more like a black hole that even experts can't hope to illuminate than resolution."

Read the entire essay here... but only if you care to share my disbelief and disgust. My perception represents only one side of the coin; shift parallax views, though, and as Becky Antworth ably explains, you will understand how the Federal government paints itself into a corner.

A realization all investors will grasp quite quickly.
-- David M Gordon / The Deipnosophist