No Pain
by admin ~ December 26th, 2008. Filed under: financial crisis.I saw a story on CNBC about this couple who had all of their $1.6 million in investments with Bernard Madoff. They are now penniless and blaming the US government for lack of oversight and pleading for the government to restore their losses. After all, they claimed, we are not rich people.
Hey wait a minute folks. Isn’t the first rule of investing to diversify? And didn’t you violate that rule Mr. and Mrs. cry-in-spilt-milk when you placed all of your money in one place? And now you want the government, the same government that you always want to get off your back, to come a give you your money back?
And thus the illustration for America’s failed version of capitalism. Everyone wants a free economy and lots of cheap credit until they are irresponsible and then want help from the government. In order to keep the public complacent, the government shells out money:
1. to people like my step-son-in-law who enjoyed extended unemployment which has now run out and who turned down jobs because “they were beneath him.”
2. to people who signed mortgage documents without reading them or getting professional help (e.g. an attorney or accountant) to read and explain them (caveat emptor–let the buyer beware–a public warning so old it started in a language that is not longer spoken).
3. to keep auto companies running that pay people $70 in compensation and benefits when long lines of people will willingly take those jobs for $25/hour
And thus we live in the midst of the crumbling of the American economy. This is our downhill ride to economic ruin, to significantly lower standards of living and a crisis far worse than the one we are in. Why? Because the politicians and the public want to avoid pain at all costs. But it’s not possible!
The obese person must have some discomfort when he goes on a diet, to correct his habit of eating to excess. The drunk person gets a hangover the next day as his body sends a message “don’t drink to excess again.” But the American public says, “I just want to stay stupid, spend money I don’t have and enjoy the my standard of living which I don’t deserve and I don’t want ANY discomfort” and our government accommodates them.
The child learns early form a quick burn not to touch the stove top. This painful lesson keeps him from walking into fires as he grows and the lesson helps him survive. When people or an economy are not permitted to feel pain, the same errors will be repeated because the lesson does not get learned and they do not survive.
Post courtesy of prospectmatch
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August 23rd, 2009 at 1:42 pm
A tad sarcastic … but nonetheless true. You need to be brave to write like this, you must have had an adrenalin rush.
I once read that your success in life revolves around your own personal philosophy and not reliant on the government. So should some government become a hindrance, then don’t change your political views, just change your own personal philosophy.
Andy
I also write for Wisdom-and-Philosophy dot com
November 24th, 2009 at 1:11 pm
Really agree with you and feeling so sad for them.Very useful and moral blog,I will bookmark it.Thanks for sharing.
December 11th, 2009 at 10:13 am
A lot of people do seem to regard the government as a parent.
You are correct I diversification of him investment is the basic rule which has just been painfully relearned by a lot of people. I am very sorry that they lost all of the money and I think that Bernard Madoff
is in the right place but you are correct is not up to the government or the taxpayer to reimburse them.
While people didn’t read their mortgage agreement before they signed probably because it was written in legalese gobbledygook. I would like to see it in all legal documents written in plain English.
December 20th, 2009 at 10:53 am
Weather it’s a dollar or 1.6 million, I do feel some sorrow for these people.
That said, one should be diversify, be smart and only invest money (like gambling) money that would not hurt you if you lose out on the investment.
It’s so easy to blame the gov’t for every friggin thing that goes wrong.
@ Book buyer.. me too. I’d love to see legal docs written in “plain”English as well.
December 23rd, 2009 at 3:48 pm
agreed! I am with you this is really touching! I prefer you and really respect your experience and review. Thanks for posting.
January 31st, 2010 at 1:55 pm
In the era of recession no one can blame anyone for any loss, its becoz the whole world suffer, but I hope this recession is going to end in nearer future.
February 9th, 2010 at 8:09 pm
Point well made. The Government’s negligence led pretty directly to the recent financial crisis. Does that mean the ‘feds’ should be reimbursing those victims for their stock market losses? Of course not.
February 20th, 2010 at 3:58 am
I feel bad about the couple that goes broke, yes. But as you pointed out, you can’t have it both ways - have a nice free market where there is no need for “buyer beware”.
I think the one of the root problems is our capitalistic take on Keynesian economics - stuff like the stimulus package is actually a bad idea - if we let ourselves feel the pain of the depression, our markets can re-organize to fit form with function.
As you said, we might learn from our mistakes.
February 21st, 2010 at 7:05 am
I agree, they should have diversified… fixed income investments are good, not just greedy investments with Madoff.
March 3rd, 2010 at 10:01 pm
This is very true. People are so dependent to the government in times of crises but when they’re on top they seem not feel the government’s presence.
Sometimes, out of stupidity, people invest their money in one place because they want to double all at ones and become even richer, only to find out that they don’t have a penny left and they suffer the consequences.
March 18th, 2010 at 3:44 am
It is always a nice idea to diversify and invest money in different companies catering to different industries. It may seem like getting only a few dollars in return but if you total it all, you’ll reap the benefits.
March 28th, 2010 at 6:40 pm
Some people can get too greedy and then blame somebody else for their own wrong doings. A million is already a big amount of money and they still want more. I don’t know but as for me, I don’t think I can consume all of those in my entire lifetime. I live simply.
April 13th, 2010 at 1:26 am
Yeah this is a though call I can easily make a statement that q 12% return year in and year out had to make many of the investors in the fund as how? If you are getting a 12% return in your investment and the market is crashing you have too ask yourself how is my fund doing this when everyone else is taking a loss, that being said I fell for those that got taken by this heartless crook.
April 17th, 2010 at 4:08 pm
Its really a dreadful reality.But its all destiny.What ever we have to face in our life,We will face.God has given every person strength and be strong by providing them difficulties and also the way to come out of it.
April 30th, 2010 at 7:39 pm
I just don’t understand these people. When you already have a sum like that why make a risky investment. Most people never in their life own an amount like that.
If they loose their money they don’t deserve more from the government than anybody else in a comparable financial situation.
June 3rd, 2010 at 10:45 pm
I do believe that they should have diversified, but I still feel bad for them. Even though I don’t think it is fair to the rest of the country, I can understand them wanting to blame someone for their troubles. Economic struggles are extremely difficult to face. No one want to cut back their style of living, the thought is frightening.
June 25th, 2010 at 12:57 am
Well it’s true that we should certainly diversify our investments among different markets to reduce our overall risk in one market or investment. I sure hope some of these couples will get at least a fraction of their money back when all is said and done on this case.
July 2nd, 2010 at 8:07 am
Quote: “And now you want the government, the same government that you always want to get off your back, to come a give you your money back?”
LOL, isn’t that ironic? I love the way some people think. I makes me mad too though. Just as long as anything goes the way they want it they are fine and they don’t care but if something goes against them they don’t know how high to jump and complain.
July 21st, 2010 at 2:03 am
At least in America you have _some_ awareness and financial independence. But if you’ve seen Eastern-European countries and experienced the post-communism generation you’ll know, that America is doing quite well.
My parents, most of my distant family is simply believing that they will get paid by the government when they retire. Even thought it’s a well known mathematic, demographic, and economic fact that the public, government-owned retirement system will go bankrupt in 10-15 years.
Believe me - it’s not just Americans that are not taking responsibility - it’s a general human population problem. It’s just easier to wishfully think and wishfully act (I’m getting a rise in a month, so we can get this house - soon we will be able to afford it) that to face the reality that nobody except yourself is responsible for your life.