 merrie says: This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen. The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients. Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. . . . . . The bailout will open the door to further federal meddling in financial markets. So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending. The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer. The bailout is a terrible idea for a bunch of reasons. First and most important- We can't afford it! We are over 9 trillion in debt.We can't be spending anymore,especially for a "bailout plan" passed with the usual bunch of loopholes. No one really knows how or if it will effect the problem. If it doesn't work then what, bailout II, an even trillion this time? Secondly- If "millions of companies" are in danger of closing their doors because they can't borrow money to meet payroll,then 700 billion is not going to accomplish anything. If that many companies are truly so payroll heavy and cash light then the whole system will be folding shortly or at least much dead weight should be eliminat... |
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