Don't Bet Against Yourself

Don't bet against yourself. This is a phrase I learned from my Father when he was explaining how he plays the casino game Roulette. Let me explain. You may have seen a group of players around a Roulette wheel, and they have a stack of chips, placing them on a bunch of different numbers all over the table, in hopes that one of their numbers will be the lucky one. This is a common way players play Roulette.

There is a problem with this particular method of play. The problem is, if you place 10, one dollar chips on 10 different numbers and one of them "hits" you still lost nine of your original chips. So you are essentially "betting against yourself". No matter what, you are going to lose something you bet. Now, we take the same 10 bucks and we will place them using the rule "Don't bet against yourself". Let's say I "like" the number 29 so my first buck goes there. The rest of my chips I play things that match 29. For example 29 is a black number, so I bet on black, 29 is odd so I bet on odd, 29 is in the last third of the board so I bet on last third, you kind of get the idea right? If your number "hits" it is a really big win, if it doesn't hit (more likely) you still might win the smaller amounts like the black/red or odd/even. So it becomes more of a game of how much money can you keep instead of how much money you lost.

My little disclaimer: If you go to gamble as a night or weekend entertainment, go and have fun. If you go to "win big" and expect to "beat the house" just stay home, it won't happen. They don't build those huge buildings in Vegas because the gamblers win.

Now let's apply the phrase "Don't bet against yourself" to government and bailouts. To start with, the American people have made a huge "bet" that certain companies are going to succeed. That bet being in the hundreds of billions of dollars. This is a bet personally, I would not have made, but since it was made we need to make sure that the companies that did get the money will succeed. The government bullying these companies about how they compensate their employees is like betting against yourself. OK, it might not be smart to give out bonuses like AIG did, but you know what? They had contracts. Contracts that must be honored.

Government wisdom believes it is good to limit the salaries of these CEO and Managers to 1/2 million a year. That is the quintessential meaning of "betting against yourself". Now you have limited the talent of the CEO to one that will accept only 1/2 a million a year. So instead of getting a person who could actually help these companies succeed, your going to get some guy whose whole management resume include phrases like "Do you want fries with that?"

The Obama team and the Democratic congress are like the gamblers that put money all over the roulette table and wonder why are losing their money. Logically speaking, I believe some of these companies will still fail, we must prepare for that, it will happen and the taxpayer will be out billions of dollars. Especially with the government betting against the companies.