Bailout
Ever since last year, there has been one bailout after another. First it was TARP for banks, then auto industry, then stimulus package, more for auto industry and now mortgage bailout for irresponsible homeowners. It is starting to piss me off. Not only that I am not getting any benefits from these bailouts but, I am paying for them all.
I didn’t get the Bush $600 check last year and won’t get the Obama $1200 check this year, either. I didn’t buy a house that was beyond my means and didn’t borrow too much money against it and unfortunately I have been making my mortgage payments every month. Nobody cares about stupid responsible me.
It seems like the government is only trying to reward bad behavior through these bailouts. People who bought too expensive houses without considering if they could meet the future mortgage obligations, banks that made bad loans to these individuals and financial industry that created bad investments with these bad loans and made a huge mess of it all, are all getting rescued out of their missteps with just a slap on the wrist.
They argue that foreclosures must be stopped because it doesn’t only affect the people who lose their house but, it reduces the value of houses in the neighborhood. Fine by me. I am planning to live in this house and I am not in it for flipping and cashing in profit. If the market value of my house goes down why should it bother me? People who got into houses that they couldn’t afford must pay a price for their stupidity. Bailing them out of a foreclosure is just going to encourage them to make the same mistake again in the future.
The banks that financed the whole housing bubble through predatory lending practices must be allowed fail. Sinking billions of dollars in the banking industry hasn’t helped. They still want more and they don’t even know how much more. Nationalizing these banks and wiping out all the shareholder equity is the best option and the government should do that without trying to sugarcoat it.
Auto companies that fail to keep up with change in marketplace and make bad deals with the unions must be allowed to get into bankruptcy and come out as better structured companies just like the airline industry. Pumping money into them is not going to change anything.
While everyone else is getting bailed out what about disciplined savers who lived within their means and saved money for the future? 30-40% of their savings have been evaporated in the last year or so. Shouldn’t they get a bailout? I think they should. If the government is rewarding citizen and corporations for showing bad behavior, they should not completely ignore the model citizen who didn’t stray from their straight path.
Update: Thanks for reminding me, Siddhi! Yes, I am also paying for that freaky, unemployed, living on food stamps and disability, baby popper in California. She deserves a separate post but, I get so angry about so many different things when I think about her that I can’t find words to write that post.
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Parag, I was thinking along the exact same lines this morning while listening to NPR! Then I figured I need to really put aside my education literature and get my hands on all information about the real nitty-gritties of the bail-outs. Maybe, just maybe it makes sense somewhere as to why I am paying for these greedy, “wealthy”, idiots at park-madison avenues, who probably have never seen the inside of the subways while I get up every morning, get onto the crowded trains, do an honest day’s work and then I have to pay for these smug people so they can go toss more of my money on corporate jets, NY fashion shows, Las Vegas bonuses and what not? Why not just take away their million dollar assets, send them in two-room brownstones (where they truly belong, given that hey have been playing with our money)? What am I not getting?? I need to understand this whole scenario, really. And don’t even get me started on paying my tax dollars for 14 kids when their mom does not even have a job!
Poor kids, poor grandparents. Maybe that doctor should pay for getting her with 8 more instead of sending her to the hospital’s social worker to give her the HELP she obviously needs rather than more babies!! What is wrong with those doctors? Are they crazy as well?? You are right, it s a whole another blog post which I am sure will rival with your GM post over the comments it’ll likely receive…
Gosh, now I can’t concentrate on my writing! I shouldn’t have stumbled upon your blog–every time I begin to type proquest to get into my journals, parablog pops up in the address bar and I end up clicking to check on the kids’ pictures,,,,,
I share your anguish on these bailouts and completely agree with your in principle that bailouts for failed companies should not be handed out. But our current problem is more systemic in nature and culmination of mistakes or unintended consequences that were set in motion starting with repealing of The Glass-Steagall Act. This led to those fantastic financial derivatives and complex instruments that made lending to risky creditors viable (moral hazard). But then there is plenty of blame to go around.
Doing nothing right now would sink us all even though we have done nothing wrong. Loss of credit, jobs, and social services is only the tip of the iceberg. I’m no economist to say what is the best solution but in spite of my principled stance of not rewarding bad behavior, these companies have become not only too big for their own boots but also for our own good and if they fail, they take us down with them. So what do we do to prevent such accidents in the future? If I knew the answer, I would win the Nobel next year.
1. I am sick of hearing how the banks put poor people in homes they couldn’t afford and how they took were given loans that they couldn’t afford. In some cases I can understand where peope tool adjustable rate mortgages and the rates were reset before the maturity date and that is bad but is not the case for everyone. People need to take responsibilty of their own actions can’t keep on blaming others.
2. Atleast a few people from the financial industry need to be put behind bars. I just cannot buy into this argument that this didnot happen without some people knowing what is at stake and what was going on. That was there job to know.
3. Why are Neel Kashkari and Henry Paulson not responsible in any ways for spending all the TARP money without any results? Now based on that experience why should we believe the new treasury secretary is going to do anything different. This is just blind leading the blind. The only argument that everyone can make is the government needs to something and thats it. What if they spend 750 billion and have nothing to show for it? The only answer is going to be atleast we tried!!! I do like the republican idea about giving tax breaks and letting people spend that money rather than government spending. This way people have the choice to spend or save. If it does not work out you can blame the populous and not the government.
4. That idiotic bitch from California needs to be neutured.
Well said. I think government spending is ok (and may be necessary) as long as it is stimulatory and helps job creation. When it simply tries to bailout the failures in the financial system, it becomes socialism very quickly and annoys fiscally disciplined citizens like us.