Government Investments

I was reading an article in the newspaper about Goldman Sachs and how they apparently defrauded lots and lots of investors by selling them subprime-mortgage-backed securities that they knew were junk, right before the housing crash of 2007.

Goldman Sachs says they're innocent, someone else points the finger at their association with the Secretary of the Treasury, and some fishy money movements around the world, yada yada.

What caught my attention is that Mississippi Attorney General Jim Hood, "whose state lost $5 million of the $6 million it had invested in Goldman's subprime mortgage-backed bonds in 2006..."  WHOA, STOP - the STATE of Mississippi invested in corporate bonds?? WHY???

States have money that belongs to taxpayers. States need to either use that money for the benefit of society or keep it in a limited-size reserve for future years, and return any excess to the taxpayers!!  States must operate as a non-profit institution.

The idea that a state is investing money is infuriating.  Mississippi voters, on hearing their Attorney General's remarks,  should pause to ponder who was in their congress when the law was passed which authorized the state to invest taxpayers dollars,  and dismiss those politicians who either voted for the measure or failed to vote against it.  Their careers must end.

Investments are for people who are willing to tolerate risk.  In general, government should not be taking any risks.  In executing its duties to govern citizens, it should be following the safest course practical, and disclose to the public any remaining risks.  We already know some exceptions to the general rule:  any military, police, or rescue action involves risks, and the public normally accepts those risks; on the other hand, the public rails against decision-makers who take unnecessary risks or are negligent in the discharge of their duties.

Investments are for people who are willing to tolerate risk. Investments are not for government. When a politician says, "this ultra-fast levitating railroad is an investment in our future", it's fine because the railroad will exist and be useful.  A stock market crash may put the railroad company out of business but the state, who should position itself as a creditor of the railroad company, can then repossess the equipment and continue using it for the public good.  When a politician says, "we're going to buy corporate bonds that don't have any intrinsic value", he should be stopped because if the purpose is to "make money" for the state, then the correct solution is to increase taxes or decrease spending. It's THAT simple.