The political classes of both parties said that in the face of this unimaginable crisis they would take the weekend – imagine that, a whole weekend! – to create a Solution. The Solution must now be implemented immediately before we can even fully understand what it is. This is a classic “rush to judgment” so that we may not notice that the Solution aims to destroy the fundamental ideals of individual freedom, accountability and responsibility that our nation’s Constitution was meant to defend.

             I dissent and ask that you communicate your own dissent.

            Our financial situation has two issues: Liquidity and Solvency.  If a bank lends money to someone and the person defaults and the collateral is not worth the outstanding loan we can call this a “bad loan.” Who should suffer the loss? Should we make the renter who lives next door absorb the loss? Should we make the shareholders of a bank that made good loans suffer the loss? This seems ridiculous! To suggest, as do our earnest politicians, that all the citizens of the United States should suffer the loss is literally nonsense. The one who must suffer the loss is the one who made the loan. Anything else is organized theft. If the bank did not inquire as to whether the borrower could repay the loan, or if it did not require an adequate equity cushion, then it must be responsible for such “stupid loans”. The same goes for those who bought those loans and thereby became the lender. The result of enough such loans should be insolvency. Moreover, a lender that leverages itself 30 to 1 and then pleads for a bailout when values fall 4% does not define a national emergency and should not be taken seriously.

            I dissent.

            On the liquidity side, let us first be clear that there is lots of liquidity. Money Market Funds alone have more than $3 TRILLION in them. This is a lot of money sitting at low interest rates waiting to be invested in something that will return more. Cash deposits at banks adds more. Thus, there is no fundamental problem with the amount of money around. The political elite apparently feel this money should be allocated to a better purpose. I agree from experience that lack of liquidity can have bad consequences for those who are solvent.

            The lack of liquidity problem can be solved with patient money. But this is hard to come by in an atmosphere of fear. When one cannot tell whether any particular hardship is caused by illiquidity or insolvency the resulting uncertainty demands a high price for patience. Are we to imagine, however, that the people in the Treasury or Congress are somehow smarter or wiser than the people at Bank of America, Morgan Stanley or Berkshire Hathaway in differentiating the two? The real difference I see is that the political elite can force millions of innocent citizens to underwrite Government’s power trip while private parties must persuade us to freely part with our money. This is coercion, not liberty.

I dissent.

            If those in Government really are smarter they would perform a greater service to the nation by starting a fund where they place their net worth at risk, along with the President, the Fed Chairman, Senators Obama, McCain, Biden and Clinton, Speaker Pelosi, Chairman Rangel and the other leaders of Congress. They can accept co-investors who trust their investment judgment and then make loans to those solvent financial institutions needing liquidity. If they can correctly differentiate between the insolvent and the illiquid they will make a lot of money, and they should. If they cannot, they will lose their equity, as they should, but at least non-investor citizens would not have been forced to bail out deadbeats and our Constitution would not be shredded!

            I love the ideals America has stood for, like life, liberty and the pursuit of happiness. I am proud that our Constitution makes us different from the EU, China, Mexico or Russia. I am not ready to sell out under panic pressure from our politicians for an “easy”, but wrong, Solution.

            I dissent and invite you to join me.

“Rage, rage against the dying of the light.”

Ken Peterson graduated Phi Beta Kappa from The College of William and Mary in 1976 and from the Willamette University College of Law in 1980. He is now the Chief Executive Officer of Columbia Ventures Corporation, a private equity investor in Washington State. You can write to him at IDissent@colventures.com.

http://www.colventures.com/NoBailout/