On a recent trip across the pond, it was observed that the price of gas is still high; the average US resident is finding it tougher to obtain a mortgage; individual new credit card solicitations seem to be at an all-time high, even though card defaults are climbing.

The Government credit card window, however, is still open. So, let's see: the Federal Reserve (US government) backed the purchase of Bear Stearns (at a fire sale price) by a competitor along with helping out other investment banks; they continue to back up Fannie Mae and Freddie Mac. Wikipedia describes The Federal National Mortgage Association, commonly known as Fannie Mae as a government-sponsored enterprise of the US. It is a stockholder-owned corporation authorised to make loans and loan guarantees and the leading market-maker in the US secondary mortgage market, which helps to replenish the supply money for mortgages and enables money to be available for housing purchases. As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) own or guarantee about half of the US's $12 trillion mortgage market.

And now, the US government (and Congress) is considering a request from the automakers of America for more than $50 billion in low cost loans to assist the struggling US car industry. On top of these new notes receivable applications, US government has notes payable due to foreign entities (Treasuries) that number in the trillions of dollars. These loans, if approved, could be very generous financial gestures indeed, but is there an asset liability matching for all this debt activity and who is going to ultimately pay?

The message of necessary expediency. When a brand new gas guzzling 'Hummer' (the consumer version of the US Army Humvee) is selling for 50 percent of its retail cost just to get it off an inventory-heavy car lot, you know the message has finally hit home. Why is it just now that we are reading US auto plants have to be retooled to produce new technologically powerful cars? How many of these auto-executives, knew or should have known, that there have been dramatic shifts in the transportation market predicted for years? Certainly, other unnamed innovative manufacturers embraced the fuel efficient revolution years ago, capitalising with huge gains in consumer market share today. Not only did it appear that this impending fuel crisis was ignored, but prevalent advertising campaigns emphasised media messages such as "Big Cars, Big People, Big Life Styles, Bigger is Best".

Any financial sceptic like me knows that this requested amount probably will not be capped at 50 billion. Is it really unavoidable for the US government to keep the American car industry employee working and saving in order to take vacations in places like our lovely island? There is no doubt that many will have no problem with the US government (or any government) propping up businesses that have been practically national institutions for more than 100 years, but what if every public and private business applied for mortgage relief?

When it comes to noting the compensation of these upper level executives in these industries in the US, the public has a long memory; but what exactly were these transportation managers doing all these years to earn these princely salaries? In contrast, it is interesting to note that the founders of Ben and Jerry's ice cream, two marvelously talented back-to-the-landers from Vermont, had a philosophically sincere employment structure. Upper management could not make more than eight-to-10 times the salary than that of the rank and file employee. Yet, even under those ethical constraints, they built a profitable product and brand of world acclaim.

If this munificent auto loan package is approved, the second message should be even clearer. No auto executive who has sat on his or her derriere for the last 15 years ignoring all the signs of an impending oil price escalation, should continue be rewarded in any way. The perceived-by-the-public profound complacency at the top of these ladders should be met by the inclusion of disincentive clauses built into any government loan contract. Will this happen? I am too much of a cynic to think so. Should I be commenting on this? Why not? The overall effects of these increased debt levels trickle down to every level of consumer economies, even ours.

We see private versus public good governmental dilemmas elsewhere in the western world. Pick up any current periodical (or scan any media website) to read articles of institutional financial distress and government responses. At issue is the question - since the civilised world believes in free markets, should governments be the saviours of the economic world? And should governments be the lender of last resort, especially when they are borrowing against the value of future generations?

Democratic Governments are for, by, and, of the people; they would struggle to exist without the input (election choices) of ordinary people like you, me, and our fellow citizens.

Governments are not generally entities incorporated for purposes of engaging in pure business with ultimate profit motives.

If they were - tenure by tenacity and appointed positions without accountability would not be sustainable. Governments are charged to provide and maintain social stability, manage budgets for the common good, while being prudently and financially conservative in funding to preserve surpluses for those yet to come.

The wheel of fortune goes round and round; however, there is a strange circularity with governments when it comes to the production of income (and jobs) from whatever source derived (as Taxing Revenue Code laws love to state). Revenue can be touted as a renaissance in new business, increase in GDP (gross domestic product), or exports, or whatever any country sells to generate valuable foreign currency and increase trade. If a country's natural resources, services and manufacturing production do not command a premium price from outsiders, then the deficit cash is borrowed and paid for by utilising payroll taxes, income taxes, passive gain taxes, property taxes, and more taxes from its own citizens' endeavors.

In a financial version of the proverbial merry-go-round, in the long run, we pay for government. It is never free. A portion of citizens' earnings goes to the government coffers. Government then, in turn, gives it back, not always in equal proportions, and not always in prudent measures. The mandate for government is a fine balance: to govern and manage the country's wealth for the benefit of all and the detriment of none, staying solvent with minimal or low debt balances, and continually building a reserve for future generations. That is the epitome of the ideal government.

Martha Harris Myron CPA-NH#1929 CFP®#67184 TEP#203510 is a Senior Wealth Manager at Argus Financial Ltd. specialising in investment advisory services focused on capital preservation and comprehensive financial solutions for clients considering lifestyle transitions and rewarding retirements. Confidential email can be directed to marthamyron@northrock.bm or 294-5709.

The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific investment, legal, tax or financial planning advice, nor as a recommendation to buy/ sell any investment product. The Editor of The Royal Gazette has final right of approval over headlines, content, and length/brevity of article.