Friday, September 26, 2008

Torn or, Is It Really Bailing Out If You Don't Solve Anything?

I'm going to take a minor break from the faith stuff that I typically do on Fridays and talk about what many others are thinking about and it's the bailout stuff. Maybe you're tired of it, but for the last two weeks, I've been basically glued to the TV news stations with the coverage of the election and now the financial meltdown. As with many things, I'm of two minds on this, so let me share.

Fiscal Conservative:
Let'em burn. People can talk about CRA and lower income people taking out loans they shouldn't have and those are important points. But here's the deal. Wall Street got greedy. They (stereotyping for effect and ease of writing) wanted to keep their share prices up and keep themselves in power and so many of the financial firms got so deep into loans that they had 1) no business backing and 2) no business investing in that they deserve to go down. Was there governmental pressure on this as far back as Carter? Yep. More so with Clinton? Probably. But the enthusiasm with which the firms sold and invested in these loans was staggering. Were they so blinded by greed that they couldn't see what even I an English major/user interface designer could see? That the housing bubble had to pop and the whole meltdown could really happen? Or did they see it coming and just want to find the fine line between profit and meltdown?

And bailout? Why the frak should we bail them out? With my tax dollars! I work hard. I don't live extravagantly, outside my means. My wife is at home with our kids. We have a paid for car. We don't have credit cards. We give, we save. We pay our bills on time. Why should we bail out people who got so greedy that they screwed themselves? If I got in over my head in bad debt and investments, would Bernanke and Paulson ride to my rescue and take over my debt? I doubt it. So let'em burn. It'll be bad for a while, but those of us who can ride it out will be better on the other side and maybe we can stop basing our economy on bad debts and bad credit and pursuing the mythical "American Dream." Maybe the Americian Dream shouldn't be home ownership any more; maybe it should be having a $1000 emergency fund in the bank.

Bleeding-Heart Liberal:
Yeah, but if we do that, what about the people who are able to save and to pay and could potentially be roadkill in the path of a crumbling economy. If the financial institutions fail, what are the repercussions of that? How many jobs will be lost? How many more homes foreclosed?

And if the government mandated that loan regulations be relaxed to help low income families get houses, doesn't the goverment have a moral responsibility to help take care of the families that got into those loans and the businesses that enabled that? Even if there was too little regulation before, we've got to get it right now. The government needs to help solve what it helped cause.

Reality (or one version of it):
Look, there's almost assuredly going to be a bailout. It's mainly just the details that have to get worked out. What needs to be decided from this point on is whether the culture of greed in the financial markets will be held in check or if they'll view the bailout has helping them dodge the meltdown bullet. There will most likely be more banks to fail. There will be more businesses collapse, but unless the culture changes, it's just forestalling what seems to be inevitable at some point.


b said...

good ole Ronald Reagan deregulation . . .

Brian said...

Its interesting how quickly a capitalistic society can become socialistic in a crisis

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