How is it that the country’s supposedly best and brightest fail yet again? We don’t need to be financial gurus to understand risk/reward and success/failure. Common sense goes a long way in life. You don’t need a master’s degree to understand it. Why can’t the likes of high end bank executives “get” it? Because they have a big brother or a sugar daddy to bail them out, unlike you and I.
Simple Illustrations
If you buy a lottery ticket and you don’t win the lottery, you lose your money. That’s taking a risk that may not lead to a reward. If you can’t afford the risk, common sense says you don’t gamble with funds you cannot afford to lose- unless you have a benefactor to pay you back for the money you blew on taking chances. That’s what happened in this week’s newest American saga—bad news banks.
You recall that when you deposit money in a bank, you are insured by the federal government for deposits up to $250,000. However, if you deposit millions, knowing the bank invests your money, you risk losing all of it except $250,000. The government agrees to give you $250,000 back of your millions. Risk/reward. That’s capitalism.
However, crony capitalism is when certain entities don’t have to play by the rules that you and I must follow. These wealthy cronies (think “buddies”) can make risky investments and “bet” on a sugar daddy like Uncle Sam to pay them back. Whose money does Uncle Sam use to help them recover losses? Yours and mine. Ultimately, our tax money pays the consequences for someone’s bad risks in a bailout. Where’s the due diligence?
Risk/Reward and Greed
Even more, excessive greed without consequences never works. Lack of due diligence is a partner to greed. They walk hand in hand.
If you think “too big to fail” is good, then you may not understand capitalism. You favor immaturity and emotional risk-taking. “Let someone else pay the consequences for mistakes made by others’ poor choices.”
In any case, I favor logic and maturity with due diligence. Let me ask: what kind of America do we want?
This is Common Sense Civics and Citizenship.🇺🇸
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