Last week I saw something on the news which caught my attention. The news item was concerning the negotiations in congress to address he current financial crisis. The plan is named a "bailout" of the large financial institutions in our nation. There are many troubling aspects of the proposal, and I am glad it has not yet been passed, and that at least for now there is some greater evaluation of the plan taking place. Be that as it may, I do not write primarily concerning the planned "bailout." I am disturbed by a comment which was delivered by a female protester outside of the U.S. Capitol last week which reflects a troubling mentality about the "bailout." This woman was part of a group that protested the plan itself. Several groups were protesting and other people were shown making various statements, but this woman's statement struck me in particular. She said that there should be "a bailout for the people on the bottom, not the people on the top."
There are some things I find disturbing about this comment. One is the idea that people or institutions, should be "bailed out" of trouble when they get into trouble. It is true that a large part of the blame for this financial crisis rests with the government for having placed pressure on lending institutions by requiring them to engage in extremely risky lending practices. Whatever the causes may be, it is a mark of a flawed psyche to believe that one is owed a "bailout" when one has continually gotten in over one's head! Such a mindset fails to consider that the only thing owed for such actions is a healthy dose of consequences applied to the party responsible for the wrong conduct.
Another is those who consider themselves at the "bottom" are not necessarily opposed to consequences for avarice, they simply believe these should not apply to them only to those who are at the "top." Of course, this immediately brings forth the question, who should be considered at the "bottom" and who should be considered at the "top"? I suspect that if one questioned that particular woman she would definitely consider herself at the "bottom." While it may seem fairer for those who are at the "bottom" economically to receive a "bailout" than those who are at the "top," the fact is that this is simply another way of excusing wrong behavior. In this case, the wrong behavior being excused is that of one who thought they could purchase a $500,000 home on a $30,000 a year salary just because it was offered to them at some ridiculously low ARM. Those of us who might have been more prudent with our finances are expected, according to the people at the "bottom", to pay the financial penalty for their mistakes.
Some could object that the reverse is true. A "bailout" for Wall Street means that the rest of the people, namely we taxpayers, must pay consequences for their misbehavior. I quite agree, which is why I am not in favor of a "bailout." Let the free market sort this out and let the economic consequences fall where they may. Yes, people will suffer, at all levels. However, it has been our failure to deal with bad consequences in the past and our failure to encourage responsible behavior that has ended in this mess. A failure to face up to consequences now will simply delay a worse situation later. We have already seen that with the earlier "bailouts" of Bear-Sterns and Fannie Mae and Freddie Mac which we were told would stabilize the economy. Those actions by the government earlier this year didn't do a thing to stop the current crisis from happening. It just got worse.
Finally, I would like to point out that the money for this is just not there! This would be simply one more case of the federal government spending money it doesn't have. The claim at this time is that this money might be recoverable as the mortgages that the government purchases are repaid. But the fact is that if these mortgages could be repaid, would so many of them have defaulted in the first place? If the funds could be recovered, wouldn't the lenders be just as able to recover them as the federal government? The best scenario in my opinion is that perhaps 50% of the mortgages are repaid which would still leave at least $350,000,000,000.00 added to the budget deficit. For goodness sake, the federal government is running huge deficits already. Ultimately, that is another burden the average taxpayer would have to shoulder, sometime in the near future of the next administration. In order for the money to be available now, it will either have to be taken from some other program already designated to receive it in the budget, borrowed from someone else (ironically perhaps from a large bank), or the government would print the money! None of those scenarios are good, and the last is the worst.
Those who support the bailout in any form state that it is necessary to avoid a recession. I think we would be far better off with a recession now than a full fledged deep depression later, which is where the whole "bailout" mentality is taking us. Other people warn that the alternative of not rescuing these large institutions might even lead to a depression now. Perhaps that is so, but the "bailout" by the government now is sure to only delay the inevitable and make a depression we would undergo now seem like kindergarten recess in comparison to what would come later.
That being said, I do not hold out much hope that common sense will prevail and that some real statesman (as opposed to politician) will tell the hard truth and recommend that people are going to have to suffer a bit for the benefit of a better future. We are a society bred in recent years to avoid any kind of suffering at all, even when it promises a better future. The view that teaches one to work hard, save your money and only buy hat you can afford to pay for seems almost extinct. No, if the instant gratification society we exist in has its way, we will do anything rather than suffer now, and we will continue a short-sighted fiscal policy in this land. The result will then be a horrific amount of suffering later.
I'm revdto, and I'm just sayin'
