It is fair to say that the U.S. financial crisis, which was ignored, has exceeded the parameters of such expression. With the solution being taxpayers funding seven hundred billion dollars bailout, I assume many are, or at least should be, aware to the current grave situation. It should not be an issue of whether taxpayer bailout should be passed but repayment should heavily discussed. I full heartedly back Barack Obama’s position that taxpayers should be treated as investors and not light heartedly "invest" their money.
I also believe it is valid argument that repayment should not be the determining factor that slows the approval of the bailout. If taxpayers don't do their part, the situation will become dire. Many financial systems are already teetering on the edge. If Americans do not inject money into markets to uphold liquidity, then we could face a deep recession comparable to the great depression. If repayments are not to be expected then I believe an overall financial system is in order. I understand that government meddling is the antithesis of a free market. I now realize that this "invisible hand of the market" exists only when the economy is doing well. The situation we are in now is much like the one we were in five years ago when the economy was booming because of the greedy financial institutions that were giving poorly underwritten, but profitable home loans. One would not think of any government intervention but now that economy is down, it is expected. Hopefully we can learn from our mistakes. Any other thoughts?
6 comments:
The government needs to stay out of it. The government always expands their powers during a time of crisis but never gives up those powers. If we bail out those financial institutions that are failing, it will be sending a message that if you are a sub-par financial institution that you are allowed to take extravagant risks that the government will provide a golden parachute for in case things go wrong. It also will allow the government to control those financial institutions creating the beginnings of a fascist state. The free market is so strong because the weak are swallowed up and the fact that these "weak" institutions are being allowed to survive is ridiculous. This bailout is just setting back the problem; it’s not eliminating the weak links which are those institutions.
Our economic stance has always been that the government will only intervene when necessary. It has been this way since the Great Depression. The problem here was that Congress provided no oversight to these crooks who were making very poor decisions with our money and are now washing their hands of the situation.
The main task the government is now trying to do is restore convidence in our markets. This is a daunting task when you have our President, in so many words, stating that the United States will cease to exist unless we get involved(A poor poor decision, Congress literally unable to come up with an agreement on anything, and these corrupt CEOs, who were the ones who ran these companies straight into the ground, walking away with millions. I believe it was the CEO of AIG that walked away with an estimated $13 million. On the other side of it. This crisis can and should be used as a wake up call to this country. It should bring back the idea that you should only buy what you can pay for, that credit cards aren't sent from heaven, and that we can no longer reward bad business practices because in the short term it is profitable. Also, it is a natural process for the economy to weed out the weak institutions in an act of the "survival of the fittest."
All in all it it vital that we use this as a learning experience and no let this consume us.
The problem that our economy faces is the lack of control that the government thinks they possess. Our government has been given the power to intervene whenever necessary, a policy that I firmly believe should not exist. Every government interaction with the economy has a negative reaction later down the line. By trying to "jump-start" the economy it is not fixing the problem. Jump starting it will only lead to an even larger failure down the line. The problem is that companies which are un-successful need to experience a loss so that another company might one day take it's place. The economy will work itself out as long as there is no intervention from outside sources. The proposal to bail out the large institutions which are failing will lead to a massive wreck. The economy will fail once order is restored.
Your comment about the invisible hand only existing when the economy is doing well is far from true. The invisible hand has been handcuffed by over-governing for the past 20 years. Our market is becoming less and less capitalistic by the day. It is scary when the government becomes so powerful that it not only tells businesses and citizens what they can do, but what they have to do.
Ronald Reagan said "Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves". This is the way it is now. The government has realized, too late, that so many of the loans that businesses were forced to make in the 90s to help people live beyond their means were doomed from the time the papers were signed. The government in the 90s decided that it wasn't fair that some people who didn't make enough money to own houses didn't have houses, so they decided to legally obligate banks to help them out.
Now, the government is in the situation it is in now, forced to bail out the companies they drove into the ground. The real issue isn't the CEO's making 13 million when their company is driven out of business (which is about 1/3 of what his yearly salary was), its the fact that it wasn't entirely the company's fault it went out of business. The government has decided that private ownership, a tenet of capitalism, no longer means anything to them in the banking and investment world. And communism is NOT what we need right now. Does Joseph (obama) Stalin ring a bell?
Ask Why Not, what do you mean the businesses were forced to make the loans that enabled people to live beyond their means? Who forced them, and how? It seems to me this was a risk the mortgage companies took in order to make more money on the interest on these loans. Can you clarify how the government, under Bush, forced them to make these sub-prime loans?
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