Informed

It has been said that the strength of a democracy depends on an informed electorate. I would like to challenge this assertion. On most important issues of the day you can find experts, people with good formal educations, people who have spent many years studying the issue arriving at different conclusions. Not only different but many time opposite conclusions. There are a number of explanations for this but one is the way facts are collected, facts are interpreted, and facts are distorted. Most of us are familiar with the old adage that figures don’t lie but liers can figure. It is my contention, that I can use my 70 plus years of life experience, along with my God given common sense and reach conclusions that are just as accurate as these so called experts. I believe that this is the true strength of a democracy and while experts often times look upon the general population with disdain, history has shown that these ordinary citizens will generally keep the experts from going off the deep end. Other times programs are established that in and of themselves are doomed to failure although these programs may survive many years and do a lot of good while they are operating. One such program is the Savings and Loan debacle that occurred in the late 80’s. This program, designed to provide home loans and made famous with the Christmas classic, “It’s A Wonderful Life”, is one such example. These Savings and Loans, (S&L’s) were required to give long term loans (25 to 30 years) at a guaranteed interest rate while depending on income that they had to pay short term interest rates. All we have to do is envision a scenario where the long term loan rates are lower than the short term rates for an extended period of time and bingo we have a problem. If the S&L has to pay out 10% interest to attract customers and is only collecting 5% interest on its long term loans it will soon run out of money and this is just the situation that took place in the late 80”s. The government stepped in and paid hundreds of millions to failing S&L’s under the FDIC program. That’s the Federal Deposit Insurance Corporation which was set up to guarantee your bank deposits up to $100,000.

Now I will go out on a limb and predict another situation which may develop into a financial disaster. Everyday on the TV I see ads for car insurance companies each saying that their rates are lower and you should switch companies. Since these ads are so prolific I can only assume that they are getting the desired results and many people are switching. If this continues then the overall rates will decline and at some point some of these companies will find themselves in trouble. At that time will they be eligible for a bailout? Should the state insurance commissioners be stepping in before to review these rates?

Another pending problem has to do with home owners insurance. Right now your policy will cover damage to your home caused by a dirty bomb but only physical damage. If a bomb goes off some distance from your home it may not cause physical damage but because of radiation you may not be able to stay in your home but that is not covered. Now you must find another place to live and keep making payments on your home. We have a similar situation with flood insurance. For many years people who lost their homes due to flood were just out of luck but the government stepped in and offered flood insurance. My guess is we will have to wait for a terrorist to explode a dirty bomb before the government takes action and those first victims will just have to suffer.



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