Bank bailout from Beanie Babies International (also known as BBBI)
It’s been many years since I heard the tapping of little feet in my house. On Sunday I was very happy to be looking after my 10 month old granddaughter while my son and daughter-in-law were on vacation. On a quest to find something in my bag of tricks that she would enjoy, I discovered a long-forgotten box full of beanie babies that my two daughters had collected years ago. That discovery brought back a flood of fond memories, including my daughters’ expectations of becoming wealthy moguls collecting baby hats.
It was the height of the dot-com boom when money was plentiful and beanie babies made normally rational adults wake up at 4 a.m. to stand in line for newly issued beanies. It has been reported that some people willingly spent up to $5,000 on rare and special baby beanies. I’ve never seen that one, but I’ve routinely heard of parents in my own neighborhood spending hundreds of dollars on just one hat. My girls had a book that speculated on the value of these $0.25 cloth and plastic hugs. Many of the projections were well into the thousands. I made a standing offer to my daughters that if they could sell one for half of what the books projected, I would give them the other half. They never charged me a hundred for that offer.
It occurred to me that the bean box in my garage is a lot like a portfolio of delinquent mortgages. None of them are worth as much as before. Frankly, according to recent eBay transactions, unlike delinquent mortgages, beanie babies have stable value and liquidity. They routinely sell for between $2 and $10 each, plus shipping. The volume is there to support many transactions. Beanie babies enjoy a mature and stable market.
Since some considered the beanies to be investments, I began to wonder if anyone had actually borrowed money secured by baby beanies. I hope the answer to that question is no, but I suspect that it could have happened. So if enough people had bought beanies on credit, would our members of Congress be debating the question of whether or not our government should authorize a $700 billion recovery plan for a beanie baby crisis? Imagine the shock of seeing someone testify before Congress in favor of legislation authorizing the buyback of $2 beanie babies with loans of $5,000 against them at the greatly discounted price of $1,500. Of course, this would be laughable and manna from heaven for late-night comedians and talk show hosts. Under the right set of circumstances, rational people, presidents and members of congress could make the decision to do exactly that.
What if banks couldn’t lend money to good businesses because the value of their assets (beanie babies) had fallen so much that they were insolvent? What if your next paycheck depended on your employer getting a working capital loan and the banks couldn’t deliver due to the cap crisis? If our country’s economic system ever depends on our government buying $2 worth of beanie babies for $1,500, would we as a people support that action? That is essentially the decision that our congressmen have to make. I hope that after careful consideration, they arrive at the best and most favorable option on which to build a new economy. For 232 years, the United States of America has enjoyed unique freedoms that have allowed us as a country to provide opportunities for prosperity to the world’s best and brightest.
Ty Warner, the founder of the beanie baby empire is a billionaire and an example of the success that can be achieved in a free market system. The risks Mr. Warner took paid off handsomely. It is of the utmost importance that the entrepreneurs of the future choose to seek their fortunes and reap their rewards or fail in this country that we cherish as the land of the free and the home of the brave.