[1]The Washington Post has an article today [2] that sums up what a lot of folks are feeling:
“I’ve been financially responsible with my own money. Why should I now be responsible for the fact that you were not?” [Ed Merkel] said.
This may be a Main Street bailout backlash in the making. The details of the financial crisis are still hard for most people to follow — what with talk of exotic “derivatives” known as “credit-default swaps” and so on — but the central fact of the matter hasn’t been lost on anyone in this Northern Virginia community: The taxpayers are on the hook for the bad judgment of others.
And they say they don’t like it. They didn’t break it, but now they’ve bought it. Political leaders and financial titans say the bailout is necessary to save the economy, but on the ground, in such places as Manassas Park, people think that the bailout will reward the wrong people. There’s a sense that too many folks bought houses they couldn’t really afford, banks urged them on, common sense went on vacation, and now the grown-ups have to clean up the mess.
“If I spent more money than I have, I don’t deserve to have somebody bail me out,” said John Owens, 45, a developer who lives on Eagle Court, where three houses have gone through foreclosure.
And this goes not just for the bailout the government is currently working on that’ll save banks and Wall Street, but the bailouts for irresponsible home owners who lived outside of their means. Banks enabled reckless borrowing and now the dominos are falling and average joes, people who are responsible and pay their bills, will now be asked to pay the bills of others.
2 million homes may be foreclosed before the end of the year. That’s about four percent of the 48 million homes owned across America. Because four percent of home owners were given loans they could not pay back the burden has fallen on the other 96% of home owners and the untold millions of renters.
“Subprime mortgages were and are risky, but they are worth it,” Greenspan said, adding that is better to have a larger property owning class with a vested interest in the system.
“I’m terribly concerned that we would cut back on the availability of subprime that has enabled a very significant increase in mortgages among minorities in the United States,” he added.
The current credit market turmoil began with rising defaults in the United States on subprime mortgages. Those problems have since spread as banks repackaged risky loans with the more reliable and sold them to a wide range of investors, including several European banks.
Wall Street has exercised questionable practices in lending and trading debts and it’s finally come back to haunt the American economy. And again the American people are being asked to bail out questionable practices of businesses who played risky business with our savings and our economy and lost.
So now we have the Federal Government preparing itself to bailout Wall Street to the tune of nearly $1 TRILLION [4] with a few clauses that grant unregulated powers to the Executive Branch and absolutely no room for oversight or challenge [5]:
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
How this has been and is continuing to be managed should be a cause for concern for everyone. What needs to be understood is that the fundamentals of our economy are indeed strong. That’s not a line to attack John McCain with, it’s one shared by Treasury Secretary Henry Paulson [6] who even Barack Obama praises [7] for his handling of this situation. And while we may be facing some big problems economically (whether or not the current “crisis” is exaggerated or not), level headed approaches are needed and people need to be hesitant on knee jerk responses that will potentially harm this nation on a greater level. A solution needs to be found that treats not the symptoms but the disease.
Yet politics will prevail. It is, after all, an election year and no one wants to be accused of being asleep at the wheel for not doing something, no matter how stop-gap.
This government bailout is not the answer. It’s throwing money at the problem and hoping the wad of cash will stop the leaking while ignoring the growing crack in the dam. Continuing to punish the American people, who by and large have been responsible with their money, have lived within their means and paid their own bills, will not solve any problems but only serve to drag each and every one of us down even farther without providing solutions to the problems our economy faces.