What If?

What if lenders were required to submit loan analysis forms showing a reasonable probability of repayment to a regulating or insuring agency before issuing mortgage loans? (or at least a computerized go/no-go program to minimize feedback delays)?

What if the government had been willing to invest even half of the proposed bailout amount into infrastructure improvements so that more people had jobs and the wherewithall to repay their loans (Does anyone remember Keynesian economics?)?

What if the government encouraged people to Buy American so that more of our capital and jobs stayed here and the dollar was worth more?

What if the government encouraged people to save money in the banking system by not taxing interest on savings accounts?

What if business management salaries were pegged to results in both directions so that they went down when the business did poorly as well as going up on increased profits?

What if U.S. imports carried higher duties that could be partially offset by purchases of our exports?

What if non-emergency government spending was required by law to be balanced by corresponding income?

What if banking and credit companies were legally barred from having fees and penalties that were not openly shown in the LARGE PRINT and proportional only to the amount of money specifically involved in the case of late amounts?

What if companies and banks could not disclose your personal information to others unless you specifically allowed them to (Opt IN, rather than Opt OUT)?

What if automobile companies could not promote "Flex-Fuel" or natural gas vehicles in any area where the alternate fuel was not readily available for purchase?

What if we all had to avoid complaining for at least one day per week (You would live longer.)?

Do You Hedge Your Bets?

Last year as baseball teams were starting to report for spring training, a furniture store in Massachusetts was developing their marketing plan for a tie-in with the widespread enthusiasm for the Red Sox. They came up with a promotion linked to how well the Red Sox would do during the new baseball season. The furniture store offered every customer who bought furniture during a certain spring period a complete refund (Their furniture purchase would be free.) if the Red Sox won the World Series. The odds against such a win were huge, so it was highly unlikely that they would ever have to pay off on this offer. However, they were smart enough to hedge their bet by taking out an insurance policy against this possibility. As we all know, the Red Sox won the World Series (Yea!), and the furniture store had something like 30,000 purchases which would have to be refunded. However, because they had hedged their bets with the insurance policy, the insurance company paid for those refunds. The store not only avoided the repayment by hedging their bet, but due to the popularity of the promotion they sold far more furniture that would have been the case without this marketing plan. It is not always possible to make a risky decision and still protect yourself against its possible consequences, but you should study all risk aspects to see if there is a practical way to offset at least part of your risk exposure before you make a commitment.