Tuesday, January 22, 2008

Chicken Roosting

It’s just another bad day in the financial markets as selling demand overwhelms buying desire. The term global market meltdown is bandied about. The reasons why all these assets are suddenly for sale vary but the goal is always the same: convert something other than cash into cash. I understand the Democrats don’t trust the market. I understand many of them don’t believe price should be strictly a function of supply and demand. I would, however, expect them to know an investment portfolio is not a money market account.

Stop the risky money raids: State government’s latest money raid didn't take long to backfire. It took all of one business day for the state’s $200 million transfer from a medical malpractice fund to go haywire. And the situation could become markedly worse.

Gov. Jim Doyle and other Democrats led the fight last fall to raid the medical malpractice fund. State leaders eventually agreed to raid $200 million to help shore up the state budget. One business day after Doyle signed the state budget, the state grabbed an initial $71.5 million from the Patients Compensation Fund, plunging it into financial trouble.

The medical malpractice fund didn't have nearly enough cash to offset the raid. Most of its assets were tied up in investments such as stocks and bonds. To get by, the medical malpractice fund had to borrow money from other state accounts at an undisclosed interest rate. In other words, one state fund was borrowing from other state funds to cover expenses it was never supposed to have in the first place. It's an unsustainable shell game.

Irresponsible fiscal management has permeated every bit of both the private and public sector. A lot of chickens are coming back home to roost. There are no innocent parties, but some people are guiltier than others. Wouldn’t you agree Governor Jim Doyle?