Father Sez

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Bailouts - the family versions can be even more painful

Friday December 26th, 2008 by fathersez

There has been a lot of debate about some of the bailouts that are being doled out by various Governments for those businesses considered too strategic or important to fail.   

The opponents of the bailouts take the view that the companies failed because they did not produce what the market wanted, were fiscally irresponsible and / or did not practice proper and prudent financial management. And a bailout would not solve this. Rather it would only postpone the “death” of these companies. FMF puts it even better.  

The supporters of the bailouts talk about the greater good and that there would be far more pain for all should there be no bailouts.  These bailouts at least indirectly affect all the citizens of the country, since taxpayers’ money is used. Still there is a certain detachment, as the people who decide on the bailouts do not actually use their own personal funds.  

What is the bailout hits closer to home, like a family member needing one? What if the bailout is needed also because of irresponsible fiscal behaviour on the part of the family member?  And the bailout has to come from our own personal funds.

Here there are also emotional ties involved.  The affected member could be a son, a daughter, a brother, a sister or even parents. And often the bailouts take a large chunk of savings from the donating members. What should our actions be? Should we take the moral high ground and say that market forces should prevail and that the affected member should just face the consequences. Or should we cave in due to our inability to see the affected member suffer? 

A brother of a close friend of mine has on a number of times hit on his father for bailouts. The savings the father had built up as a result of his frugal ways and hard work were badly affected by these bailouts. Still he paid.  I have often wondered about what the deepest thoughts of the father about these bailouts were?

Malaysian papers often carry stories on loan sharks going after the parents or the spouse when one of the children or the other spouse runs off without meeting his or her loan obligations. There have been even cases of parents disowning their irresponsible children 

I have no idea what I would do if any member of my family needed a bailout. I suppose I would do all I could if the matter was a result of an unforeseen accident or such. But if it was a result of sheer irresponsible behaviour then I suppose my stand would have to be different.  

I am completely in agreement with Brip Blap’s well written argument that YOU are your own bailout.  Only YOU can fix YOUR problems”.

So if any of my family members ever come to me for a bailout, this would be the test that I would apply. If I cannot answer this question with thumping certainty, then it would be just more money down the drain.  

Still it is lots easier now to get way over our heads in debt, than it was when I was starting out. My two elder girls have just started out in their working lives. I hope that they have learnt enough from our talks and their own reading not to get into any financial hole too deep to climb out of. 

And I pray that I’ll never be burdened with having to apply BB’s test on any members of my family. 

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One Comment for “Bailouts - the family versions can be even more painful”

by N M Krishna Kumar, Chennai, India
On December 26, 2008
At 5:24 pm

Sir, What you have mentioned is true but in India no such thing has bail out has started happenning. People say that Indians (especially south indians) invest in Fixed Deposits and Gold and only a little more than 1% of the Indian Population invest in Shares and Stocks and the stock market crash does not affect the average household

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