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John Daly, Wall Street Bailout and Bottoming Out

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One little problem that confronts you,
got a monkey on your back.
Just one more fix, Lord, might do the trick.

-Lynyrd Skynyrd

I saw a pathetic story about golfer John Daly and how he continues to screw up his life. He has blown through millions of dollars, drinking problems, multiple wives and a potentially great golfing career. He is signing autographs at Hooters to make a few bucks.

People in the addiction world say that before an addict can get help, they have to "bottom out." They have to reach their lowest point. Then they can get help and turn their lives around.

John was never able to hit bottom. There has always been another corporate sponsor or another fan to buy him a drink. Hooters is his latest enabler.

It's hard to come up with a more inappropriate sponsor for John Daly than Hooters. They need to cut John loose and let him bottom out. Or be ready for when he drops over dead in one of their bars. He needs help, but Hooters is not the place to get it.

When I think about John, I also think about the Wall Street Bailout.

We made a mistake in not letting Wall Street hit bottom, too.

I was a fervent opponent of the bailout. Someone called into a radio show I was on and asked me what would happen if we didn't do the bailout. I said some companies would fail and the S&P 500 would drop by about 50%.

Once we hit that bottom, we could start the process of repairing and climbing back up the ladder.

Just like addicts do. They hit the bottom and reassess their lives. Many go on to productive and wonderful lives.

They just needed to hit the bottom first.

The quicker Wall Street bottomed out, the quicker we could have started the recovery. Instead, we enabled it to the tune of $700 billion.

There was no particular strategy to the enabling. We propped up some companies and let others fail. Instead of letting the stock market drop hugely overnight, it has been dropping over time, with no signs of hitting a bottom. Bad companies with bad management are allowed to make the same mistakes that got them into trouble in the first place.

No one on Wall Street is getting it. Instead of taking the $700 billion and making sure that it trickles down to Main Street, they are using it to buy other banks. They spend a lot of time talking about bonuses for their bigwigs.

A company getting taxpayer bailout money should not be handing out bonuses. A company getting taxpayer bailout money shouldn't be buying other companies or paying dividends to stockholders.

There is a word for companies that need a government handout: Broke. Why should people get bonuses for managing a broke company? Or for managing a company broke?

If my business in Richmond, Kentucky goes broke, no one gives me a bonus. They tell me to find another job. Creditors take my house, car and cash. It's the small business version of bottoming out. Very painful, but sobering.

Most of us in smaller businesses have bottomed out several times. Once we hit bottom, we figure out what we did wrong. We don't make the same mistakes, and we often come back stronger than ever.

Both Wall Street and John Daly need to go through that period of bottoming out and self-examination. Neither one has. If we keep enabling them, neither one will.

At least Daly recognizes that he screwed up. Wall Street doesn't seem to get it. Many businesses remind me of addicts who think one last fix can cure their problems. More companies, from many industries, are trying to get a piece of the bailout money or get a bailout of their own.

We have to let some companies bottom out. We need to let them truly examine how they got in trouble in the first place. We need for them to shed their bad habits and replace them with good ones.

The alternative is to have the economic equivalent of John Daly - Years of resources being wasted while we hope for a turn around that never happens.

We've learned lessons by watching addicts. We've learned lessons by watching countries, like Japan, prop up their economies. We know what to do. We just need leaders with the guts to do it.

Its time to let Wall Street bottom out. It is the only way it will truly bounce and rebound.

Don McNay, CLU, ChFC, MSFS, CSSC, is the founder of McNay Settlement Group in Richmond, Ky and an award winning, syndicated, financial columnist. You can write to him at don@donmcnay.com or read what he has written at www.donmcnay.com. McNay is Treasurer of the National Society of Newspaper Columnists and the author of Son of Son of a Gamblers: Winners, Losers and What to Do When You Win The Lottery.