The $700 billion economic bailout package has been the talk of the town lately. A lot of that talk is how necessary it is but even more talk of how bad it will be. Why should the government bail out investment firms and such because they made some bad decisions? I didn’t take a bad mortgage so why should any of my tax money be at stake?
I hear you. This situation is really convoluted. The NY Times has a nice article by Joe Nocera explaining the panic of the credit crisis and how it blew up. So it seems that no one can borrow right now due to market fears and that’s why the government needs to step in to purchase these bad loans. Hmm. Still doesn’t sound like a great deal though, but perhaps necessary.
But let me ask this, just hypothetically:
What if the economic bailout plan actually works?
So the gov’t buys a ton of these loans. The mortgages aren’t all going to go bad are they? What if most of the people pay off their mortgages? Then the government would make money off of the loans. Could that mean we might need less taxes? Could they turn out to be ok securities in the long run? Is a lot of the current situation based more on fear than on actual bad loans? Just a thought here.
I’m as cynical as the next guy. But do you think there can be a bright light at the end of the financial tunnel?
What do you think?
Sign up with ING Direct and get a $25 bonus
photo credit: Javier Volcán
- Festive Link Love Carnivality #27
- Why Economic Stimulus Handouts Are Bad - It Kills Innovation
- Cash For Clunkers - Who Wins, Stimulus Or Environment?
- Peter Schiffs Open Letter to his investors – Part One
- Weakon 247: The Great Depression
- TARP 2009: Where Are They Now? Part II
Subscribe to Free From Broke | Follow Free From Broke on Twitter
{ 3 trackbacks }
{ 5 comments… read them below or add one }
It’s a nice thought, and it might work in the short-term. However, unless some fundamental changes are made, we’ll be right back here in a few years — only this time with an even bigger price tag.
And, personally, I don’t believe in the eminent demise of the economy theory. I don’t buy into all the doom and gloom that unless we do something NOW! we will all be in Big Trouble.
It would be a wonderful thought if it all worked. I personally know 3 friends that are close to foreclosure so I don’t know if we have seen the bottom of this housing mess yet. I’ve read that more teaser rates will be resetting in the coming months and year.
I do like your optimism though:)
So ideally the world is a perfect place and everything will work out great. Ultimately it comes down to the “default” option. If I can declare bankruptcy and can escape being “penalized” for it it becomes more lucrative especially in a time like this to let the other taxpayers suffer for it. I see that by bringing the bailout in place it’s like socialism for a democracy and right now it’s just time folks buckled down and eat their cake.
So many of these financial ills boil down to personal financial responsibility: being an educated and savvy consumer, being thrifty, not trying to buy more than you can afford, being economical, valuing education and its benefits, knowing the difference between a want and a need, putting money away for a rainy day, wise investing, etc. Both parents and schools need to teach financial/economics information. Everyone needs to know how to manage money!
I’ll admit, I’m being overly optimistic i this post. It just seems that so much of the market is based more on fear and speculation than on actual facts. Ok, a bank should go down on valuation. But there are other companies that are declining too. A lot of that could be that people are pulling their money out but that’s in big part because of the fear. Today’s market news isn’t so great so far. But you know what? I’m gonna be buying some cheaper stocks and get more for my buck in my 401(k) my next paycheck. I’ve got time and I think we’ll pull through all of this.