How Merrill Lynch & Our Government Are Alike
By now, you've no doubt heard about the US Government's plan to offer widespread relief to all the poor folks who bought more house than they could afford a few years ago when mortgage rates were at historic lows.
You know who's paying for this "relief" don't you? That's right folks . . . I am. And you probably are, too.
This relief, like our government, is funded by tax dollars. I'm paying my hard-earned dollars to help bail out our nation's financially irresponsible masses.
And part of the problem is the government itself who just a few short years ago was calling on every lending institution in the country to lower their underwriting standards so more people could qualify for loans regardless of whether they could afford them.
This is not a political post or opinion, just a statement of fact.
But, what has this got to do with Merrill Lynch?
Well, you see, Merrill Lynch was among many firms heavily involved in this mortgage mess, and they've been paying the price dearly as evidenced by their last few quarterly earnings announcements.
On top of this, just yesterday, Merrill announced that they're selling stock and selling off more of their bad loans for pennies on the dollar -- not a good demonstration of buying low and selling high, by the way.
Who pays for this, you ask? The Merrill shareholders; that's who. With Merrill selling additional shares of their stock, they're diluting their existing shareholders equity in the firm.
My opinion: The government should stop bailing out people so they don't have to face the consequences of their bad decisions. Likewise, there shouldn't be a safety net for public companies (see Bear Stearns) if they aren't in a position to deal with the consequences of their bad decisions.
One final note: Has is occurred to anyone that these Wall Street firms who ask you to let them manage your savings and investments can't seem to manage their own balance sheet?