Yes, you heard it. Treasury Secretary Hank Paulson is rushing out a plan to insure money market funds.

“Huh? Wait a second,” you say. “You can’t…. ”

That’s right. Why the government is bailing out mutual funds is beyond all logic. Here’s why. Money market funds are where you place your money in a bank if you allow the bank to use it in investment in market play. They usually provide these funds with a better percentage return than your comparable savings account but the big risk that you take is that it’s not FDIC insured. This is due to the fact that FDIC has certain rules and regulations on what the money can be used for in savings accounts and how much the bank has to hold onto whereas non-insured money can go “kaput”.

So why are they insuring it the next year? Because of all this Armageddon talk and how it’s the Great Depression again. A lot of negative buzz words if you ask me. I’m not an economics professor or expert by any means, but comparing now with 1929 is extremely coarse logic at best in my opinion. These days, financials are very much dependent on the global economy and the borrowing and lending on the global scale. If anything, globalism prevents these types of catastrophes from happening unless the entire global economy falls prey to itself. That’s actually a possibility also, but with as many variables in play as it is, it would be one of those statistical anomalies. Also in play is the general evolutionary timeline for any corporate environment. Corporations live and die by how they adapt to the current environment. My favorite example is DEC. Anyone remember it from the 1990s? They were one of the biggest technology firms around. Yet, not one mention of them these days due to non-adaptive management.

So why should we bail out the same investors? In every money market fund I’ve ever invested in, it’s in black and white that it’s not insured. You take the same risk just as you do with stocks, except you’re hoping that the bank portfolio managers know how to invest better than yourself. That’s the difference, just as it is with mutual funds. You never get a better percentage in investments for nothing. There’s always collateral. Always something. What are those famous words your daddy told you when you were little? Oh yes. “There’s no free lunch.”

So why is it that there’s a “free lunch” going around here? So why are these financial institutions and investment firms getting “get out of jail free” cards for making bad decisions is all but a political move to save people from themselves instead of actually forcing people to learn from their mistakes? Think of the parent that keeps interfering with the learning of a child because it’s not “safe”. Will the child ever learn to quit making errors? Of course not. Why would you when you have a safety net?

And all the while, those that understand just a little bit about how money works gawk at the fact that again they’ll be forced to pay for other people’s mistakes through taxation. It’s no wonder that other countries hesitate at loaning money back which drives us further into a hole. We dug ourselves in. It’s time that we quit digging ourselves deeper.

Photo Credit: (rutty)

While partnerships, and mobile web are definitely players in the problems of the Asian markets, there are a couple other pretty obvious things that escapes most English driven markets.

1. Dual market launch - If you’ve noticed when Twitter rolled out that immediately in close behind, China was rolling out different types of Twitter clones. Fanfou being one of the first, but also ones such as QQ backed TaoTao. Immediately, the hit that made microblogging popular in the US and Europe also had its market share taken away in Asia because it didn’t launch there. Here, it wasn’t a matter of translation or culture but a matter of first to market. And the first guy to market always has one of the greatest advantages.

2. Translation. And we’re not talking about technology differences. Plain ole’ word for word translation. The moment you launch a product where you seem to be using Babelfish or Google Translate for the text is the moment you lose to any native speaking copycat. Not only does it come across as amateurish, but most native users won’t use something that can’t communicate better than a preschooler.

3. Culture. This is a huge issue regardless of what industry you play in. Why? Each culture takes on technology differently and how you term something in your native tongue might be an insult in another. Thus, there needs to be careful planning when the user interface is created with localization teams involved throughout the entire development process. If the localized team can’t understand why the product itself should be in the market, then what makes you think that anyone else in that market would?
   

While there are many other things involved in global mediums, these are just a few of the reasons behind failed business launches in Asian markets. It might seem like petty basic things, but sometimes it’s the most basic of reasons that takes your product and flushes it down the drain.

It’s really as simple as common sense. Look at it from this example. If you are currently paying $600USD a month for rent, then equates to $7200USD annually. In three years, you basically have sunk $21,600USD into someone else’s property. If you calculate out putting a down payment of 20% on a house, then this means that you could afford a $108,000USD home.

Worst case scenario, your home decreases in value. Yet, you are still putting that money towards something so you actually own a percentage of your home instead of the green disappearing into oblivion.

It might sound obvious, but buying will always be more worthwhile based purely on the fact that ownership of something is greater than ownership of nothing.

However, there are others that believe that the homeowners (whom are the victims in the whole subprime meltdown) are the ones that should be bailed out. On some level, I agree. There was no reason for mortgage brokers to push ARMs (adjustable rate mortgages) onto those homeowners.

But on another level, I can’t in good conscious actually think that homeowners should be bailed out. Let’s face it. This is no different than if you racked up a large credit card bill and then wanted out because you didn’t know that the percentage was so high that you couldn’t pay. Several questions come to mind when this happens:

• Did you have to buy such a large house?
  
• Did you not understand what adjustable rate meant?
  
• Why didn’t you do the homework on how mortgages worked?
  
• What makes you think you can refinance, when in essence, you’re asking for more credit when you already have a load of debt?

There really isn’t any good reason to even go with an ARM at all unless you’re looking to pay it off, and pay it off quick. And that’s assuming you found a mortgage that had no penalties attached to it.

I hate to say it, but I personally just don’t believe that we should bailout homeowners whom didn’t shop around and/or ask their realtors if they themselves had fixed mortgages or not. In my experience, the most common mortgage seems to be the fixed thirty year. There’s a good reason why it’s the most common.

Yes, homeowners were the victims of predatory mortgage brokers. But we’re also all adults. It’s time people started acting like it.

But I’m here to tell you that plain ole’ logic dictates that banks, especially the larger ones such as Bank of America (BAC: 13.98 0.00%) and others will weather this storm just as they will others in the future. Why? Let’s just take a look at what happened right after the financial tornado touched down. Countrywide Financial Corporation (CFC: 0.00 N/A) sells itself off to Bank of America for $4 billion in an all-stock buyout.

Now what bank would be able to buy another company for $4 billion in stocks without even flinching after getting its wind knocked out? It would be a bank. Why? Because as long as society exists, there will be people out there that need to secure their finances and more often than not there will be people that need to borrow money. In that sense, there will always be someone there to lend them the money at an inflated percentage. Unless the apocalypse comes and the four horsemen are riding, I sincerely believe that financial institutions will exist and prosper. Thus, while many of their stocks might be lower than what you’re used to, they will rise again.