Remember, they're here to help

A good percentage of Americans seem to understand the 'bailout' process is a way to reward reckless behavior, recapitalizing failing financial institutions that are stuck because of their own lending and investment practices.

As bad as that is, I wish it at least stopped there.

It seems the newest announcement--that Uncle Sam plans to buy direct stakes in many banks--isn't just for the reckless and failing. No, if he decides you need his money (with all the attached strings that implies), you better take it:

Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes.

But regulators said some banks will be pressed to take the taxpayer dollars anyway.

At Evergreen Federal Bank in Grants Pass, Ore., chief executive Brady Adams said he has more than 2,000 loans outstanding and only three borrowers behind on payments. "We don't need a bailout, and if other banks had run their banks like we ran our bank, they wouldn't have needed a bailout, either," Adams said.

The opposition suggested that the government may have to continue to press banks to participate in the plan. The first $125 billion will be divided among nine of the largest U.S. banks, which were forced to accept the investment to help destigmatize the program in the eyes of other institutions.

In return for its investments, Treasury will receive preferred shares of bank stock that pay 5 percent interest for up to five years. After that, if the companies haven't repaid the government's initial investment, the interest rate goes up to 9 percent.

So in reality this foolish government takeover of the market can't even be spun as an entirely benevolent rescue of failing companies... no, even healthy banks are being pressured to take the cash. Why? Simple -- Uncle Sam knows the only way to postpone the Debt Day of Reckoning is through more debt. He will increase that credit flow any way he can, even if it means co-opting healthy financial firms who want nothing more to do with the toxic stuff.

When you try to cure the patient by giving him more poison, you might make him feel better for a while, but you're still killing him all the same. And when these formerly healthy banks start to fail because they were first pressured to accept government money, then pressured to make sub-optimal loans (hey, it's happened before!), the free market, not government interference, will be blamed.

You think someone's trying to set us up to accept wholesale socialism?