Ron Paul’s opposition to Bankruptcy Reform is hypocrisy

You're a bum, Rock. You're a bum.

In his recent article, Congressman Ron Paul of Texas concludes that forcing inefficient corporations into bankruptcy is a more reasonable solution than bailing them out.

“Bankruptcy was the stimulus that we needed in the case of AIG. More bankruptcies would clean out mal-invested resources and enable economic growth again.”

Ron Paul gets it right, but why is it that he and other politicians view corporate bankruptcies that reorganize debt (known as Chapter 11) as a reasonable solution to economic calamity, but they view personal bankruptcies that reorganize debts (known as Chapter 13) as “homeowner bailouts”?

How could Dr. Paul say bankruptcy will fix the economy then oppose bankruptcy reform for the Middle Class?  After all, the bankruptcy reform bill does nothing more than TEMPORARILY give ordinary Americans the same rights in bankruptcy court as the big boys.  Politicians, like Dr. Paul, who oppose bankruptcy equality are hypocrites.

The truth of the matter is that allowing bankruptcies to fix Corporate America and Middle Class America will enable the economy to more quickly reset at a lower level.  Think about it.

Today, all businesses are reducing their prices of good and services, whether we are talking cars or steak.  As a result, workers in these businesses are being asked to reduce their wages across the board.  Because of the decline in the cost of most everything, the impact of wage reduction is not as severe . . . except in the service of existing debt.

The only major sector in our economy that is not resetting at a lower level is debt.  Our house and car payments are the same.  The reduction of personal debt levels in bankruptcy allows the entire economy to find its equilibrium at a lower level.

However, our politicians are doing the very thing that ensures disequilibrium.  They are creating money out of thin air and propping up financial and manufacturing institutions with a proven track record of wasting money.  The long-term result is not even debated: Years of hyperinflation, meaning soaring prices and the devaluation of the money in your pocket.

Congressman Paul points to recent history to make his case.

“The 1990’s is referred to as Japan’s “lost decade” because of the zombie banks kept on life support by the Japanese government.  Any productivity was redirected through these engines of wealth destruction, resulting in long term stagnation.”

Sadly, the straight-talker from Texas must have a split personality when it comes to helping the backbone of our country – the American Worker.  Otherwise, he and his minions would support the Helping Families Save Their Homes in Bankruptcy Act of 2009.