1/n

I took bailout money once.

I was 22 and a senior in college. I had been irresponsible with credit cards for 3 years and had finally maxed them out. My card got declined at the gas pump, and I had to borrow money from my grandma to fill my tank.
2/n
My grandma survived the Great Depression. She was a Rosie the Riveter during WW2. Coming from literally nothing, she went on to retire young with some rental real estate and a solid nest egg. As a widow and then 79, she still mowed her 2 acres twice a week.
3/n
Borrowing money from her was an embarrassment. And I vowed never to put myself in that situation again. I sold stuff I didn& #39;t need, started working more, created a budget, and did everything I could to pay down my credit cards.
4/n
The experience profoundly changed me. I grew as a person. I improved.

How do we move forward as a country and a society if corporate bailouts are not only accepted, but encouraged and expected?
5/n
We MUST help our fellow citizens who& #39;ve been negatively impacted by COVID-19.

We CANNOT, for the sake of the country, continue to bailout hedge fund managers, bankers, and corporate CEOs who& #39;ve abused the system for years and gambled and lost.
6/n
Natural law is survival of the fittest.

This has become survival of the shittest.

By bailing out those who didn& #39;t manage their balance sheets, bought back stock over investing in R&D, or speculated in risky financial instruments, we kill progress. They have to fail.
6.5/n
The Fed, just yesterday, announced plans to spend hundreds of billions to buy junk debt ETFs that will not save or create a single job. Think about that.
7/n
When we let these bad actors not only continue, but thrive, it comes at the expense of many:
1. The taxpayer
2. The employees
3. The competition
4. Innovation
8/n
The taxpayer. This one is obvious. We are right now subsidizing corporate CEOs who paid themselves by buying back stock & hedge fund managers who gambled on risky derivatives & lost.
9/n
Before a company gets any bailout money, these people should cover losses personally.

Just like any small business owner is forced to do.
10/n
The employees. Employees of companies receiving bailout funds have this week been hit with job losses, furloughs, and pay cuts, despite Congress assuring us all that they wouldn& #39;t permit this.
11/n
No flight attendant, baggage handler, or pilot made the decision to buy back $46B worth of stock in the big three US airlines. Their 3 CEOs who did profited to the tune of over $300M personally over the last 5 years. That should be clawed back before any bailouts.
12/n
The competition. When companies who misallocate capital are rewarded with bailouts, their competitors who acted responsibly are harmed.

2009 gives us a great example in banking.
13/n
National City was a regional bank in Cleveland, OH who had avoided subprime lending. PNC was a Pittsburgh-based bank who accepted TARP funds to offset loan losses from subprime. With all that free government cash, PNC bought National City.
14/n
If we were capitalist and if we valued progress, PNC would have either failed or had to be acquired by a stronger company like National City. Instead, the company who failed and couldn& #39;t effectively run its business got to take over a healthy one and mismanage it.
16/n
Buybacks for the last two years have outpaced R&D spend and CapEx spend. Buybacks are cash incineration. Once the buyback is done, a liability is left and no asset is there to offset it and generate cash.
17/n
Had companies invested that money in innovation (R&D) and efficiency (CapEx) instead, we& #39;d be much better poised for economic rebound and less in need of bailouts. They created their bed and the executives should have to lay in it.
18/n
In closing, we must help our fellow man and woman in these trying times.

Corporate bailouts aren& #39;t the answer.

We must get back to valuing and rewarding discipline, hard work, and ingenuity and stop the bullshit of bailing out bad behavior and poor performance.
You can follow @realJosephRich.
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