Apr 14 2009
Relocated: Why I’m Scared About the Bailout
Wednesday, October 1, 2008
Why I’m scared about the bailout
Okay. First of all, I am opposed, as a matter of principal, to injecting taxpayer dollars into the economy. I maintain that the free market works, that it occasionally corrects itself, and that it should be allowed to run its course. I think the worst thing we can do is have a “free market” with either the risks or the rewards taken out of it.
Second, this is getting so much attention and has had such an effect on the market so far that I’m worried that people are going to think this fixes what’s wrong. Whether it is policy makers or banks, they need to learn the lesson from the market correction we’re going through right now. I’m worried that the bailout is going to be a “quick fix” and everyone is going to turn around and go about business as usual.
That being said, the whole point of the bailout, and some of the provisions that people were trying to put in it, is ridiculous to me. We are obviously where we are today because our entire economy is based on money that doesn’t really exist. Credit is a good thing, to a certain extent, but let’s face it. Right now, it’s getting out of hand. So why are we going to try to “free up credit?” Why are we worried about helping people who make less than 50K keep their houses? They can’t afford houses. When you take out a loan, there are terms. One of those is that if you can’t pay, you can’t stay. I make less than $50,000 a year and right now, I would not THINK of buying a house. Because I know that should something happen, with no savings to my name right now, I would wind up no just evicted, but losing out on a down payment and payments put in over a certain period of time. I KNOW that I can’t afford a house.
Why are we bailing out banks which took risks? They chose to take those risks, and people chose to put their money in banks and investment firms which took those risks. Again, nobody was complaining a year ago, when all of these risks were bringing huge rewards. Rewards shouldn’t come without risks.
That being said, here’s the direction I would like to see us move in: regulate banks more on disclosure. For example, if you put your money in a bank account for the purposes of a checking or savings account, and that bank is doing something other than mortgages, credit cards, etc. with that money, they should have to tell you. Basically, if your checking or savings account is any riskier than what most people would think of a checking or savings account being (very low risk), that should be fully disclosed. Same thing with other investments.
BUT, bailing out everybody who makes a mistake (whether it’s a company or an individual) is not the right thing to do. As non-material as credit is now, it becomes even less real when everyone knows you don’t REALLY have to hold up your end of the deal, because Uncle Sam will help you keep your house, or your doors open, or whatever else it may be.
Posted by Zach at 3:58 PM 0 comments Links to this post
Labels: bailout plan, banks, economy
