Financial Crisis or How I Learned to Stop Worrying and Love the Bailout

When I first heard the term “Bailout” in 2008, I (and millions of Americans) thought to myself: “why should *my* tax dollars be given to these irresponsible and idiotic companies?”

If this country is going to continue the charade that it’s a capitalist society (I hate to break it to you, but this country has been socialist for a long time now; however I’m comfortable with that) then why not let the laws of capitalism rule and let these companies crumble?

The pros to the bailout were numerous and nebulous to the general public (frozen credit markets, government financed take-overs would be less costly in the long run); the only one that resonated with people was that the US couldn’t afford that many newly unemployed people. On the flip side the cons were everywhere: companies hadn’t learned any lessons, no accountability, fostering the entitlement mentality of Wall Street, etc.

The bailout started in the financial sector but soon started to grow. Detroit came with their hand out, but met a much more stern Congress compared to the red carpet treatment that Wall Street received.

I was against these bailouts, but it has dawned on me that the issues weren’t the act a small group of people. The issues these industries were facing were truly systemic. Additionally, this isn’t the first time the government has stepped in to bailout an industry or a company.

It isn’t as true as it used to be, but there is the old adage “As General Motors goes, so goes the nation.” The negatives of financial collapse on Wall Street and in Detroit far outweigh the debt that will pile up.

So I’m not happy about the billions going out the door to Corporate America, but with any luck this recent patch of tough times will reign in some of the extravagant perks and salaries of high level executives (a boy can dream, can’t he?).

However… with all of that being said, I am back to square one when it comes to Obama’s mortgage bailout plan.

Much in the same way that my last post lamented the focus of time and money on a slim minority of people who probably don’t deserve the “help” they are receiving; this bailout is eerily similar. Did you know that over 95% of US homes are NOT in foreclosure? Over 90% of homes are current on their payments.

We see these scary headlines every day like “Ninety Percent increase in US Home Foreclosures”. Foreclosure is a scary process, and I’m not minimizing those facing that prospect; but how do you target those who deserve help instead of idiots who got in way over their head, yet not alienate the 90% of homeowners (not to mention non-homeowning taxpayers) who didn’t get themselves in a heap of trouble? Is the problem truly systemic when 90% of people are current on their payments? Why are we addressing the minority at the expense of the majority?

Maybe someone can talk me into loving this latest bailout; but until then I’ll continue to worry.



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2 responses to “Financial Crisis or How I Learned to Stop Worrying and Love the Bailout”

  1. Rev Mark Avatar
    Rev Mark

    One of the fundamental problems with bailouts is the prevailing notion, as you correctly pointed out, that economically we’re a purely capitalistic society without any socialism, and so any funding from the taxpayers is a blind investment that should be done with “no strings attached.” Once we recognize this, then we should view bailouts as something akin to either a “substantive shareholders stake” or a “hostile takeover.” Without set conditions, bailouts will reward those systemic feelings of entitlement, corporate perks and bloated corporate salaries/pay packages.
    My preference for all bailouts is that they ought to be in line with a new model of corporate raiding, where any excess is cut (from CEO’s on down), sound business practices rewarded and poor business practices are penalized.
    Having rewarded bad business practices by numerous corporate individuals in the current bailouts the new home mortgage bailout is following the same line of thinking. Instead of companies it’s bailing out individuals who either invested beyond their means or were seduced by the lure of equity and stability (similar to the corporate situation). In this case it’s what’s good for the goose is good for the gander.
    There are also numerous companies, insurance and banks included, that will not be bailed out because they followed sound business principles and practices. They are diversified so that even with the stock market woes they will continue to be in business.
    I believe there will be little or no fundamental changes in the corporate system, Wall Street or the stock market. Avarice at the individual and company level will continue to flourish. It’s a raw deal all around.

  2. wadE Avatar

    good time to not be a US taxpayer, eh? 🙂

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