Bailout Bad for Business

The Bailout has not passed and fear-mongers are trying to scare Americans into a stupid and selfish legislative answer to a business problem.

The way things are being portrayed in the news it seems like the entire world economy will collapse if the US congress does not step in and hand Wall Street money. What is not being said, at least not loud enough, is that this capitalistic society was structured to bend and stretch and every once in a while go through really tough times. If Wall Street decides to take a risk by giving out money to unworthy recipients it should not be the general populace that has to pay the penalty when the loans fail.

Companies that make bad loans should absorb the resulting losses. If the losses are enough to put them out of business then perhaps in their next company, when they are challenged with the ‘questionable loan prospect’ they will not be so willing to take the easy loss.

If, on the other hand, the unwise lenders are ‘bailed out’ they will continue to follow the same pattern and keep expecting Big Brother to be standing by with a bucket full of money, ready to start bailing.

Jeffrey A. Miron, a senior lecturer in economics at Harvard University believes that the lending industry needs a spanking. Miron is one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan and urging cogress to allow business to run its’ course (which means bankruptcy to the unworthy - a form of natural selection). He says this,

“Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This “moral hazard” generates enormous distortions in an economy’s allocation of its financial resources.”

( http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview )

There has been a lot of largess in the past couple of decades coming from groups who invoke the future of our children, grandchildren, etc… in hopes of keeping us from throwing soda cans in the wrong waste can or trying to keep us from cutting down trees in order to build homes. I wonder if those same martyrs are willing to take the hit that will be the result of our excesses of that started in the 1970’s. If we succomb to the bailout pressures we will be casting the future into a financial abyss.

Do yourself a favor and ask around - what are the opinions of friends, neighbors, enemies, strangers or anything that breathes - at what level of efficiency do they all think our government runs? If the public approval rating of congress is any indicator the answer is 9 to 10 percent. Try to get out of 1st grade with that score.

Now we are listening to the promoters of this bill telling us that the government is going to buy up all these mortgages and eventually be able to sell them back to the public(you and me) and, in so doing, make all our money back and maybe even a profit. To put this in its’ proper perspective we have to try and recall the last time our government ever made any money in a business deal. It is really simple. Yes, that’s it. Every time they raise our taxes. That’s it. They are worse at doing business than the guys who are trying to rob us of $700,000,000,000(a.k.a. seven hundred billion dollars).

Putting the gov in charge of making us money and we will become servants to the Chinese, the Japanese and probably the Pekingese. If the government understood business we would not be in this predicament.

I think we should strongly suggest to all of our representatives that they go home for the duration and call back after the election to find out who their replacements are and if they need anyone to clean their offices.

Everybody needs to go. Kick both parties in the butt and then throw one for ourselves(party that is).

Oh yeah. This article is supposed to be related to the mortgage industry so I will have to tell you, if this bill does not go through mortgages will be almost impossible to get and a lot of people will be out of work. Social programs will dry up. All the programs which repair our roads, pay for our library books, run our elections, feed poor school kids, pay for crossing guards and police and hundreds of other things we use on a daily basis will be gone.

However, if this bill does go through the result will look like business as usual, at first. Then, a little at a time the tax burden creep up and will be very high on everyone. Many who could afford a home now will not be able to because of the extra costs of the taxes. I remember my Mom saying money doesn’t grow on trees. That much money wouldn’t grow on the Brazilian rain forrest. The money has to be replaced somehow. Yes it means sacrifice. More work, less frills.

The upside is that we will pay the price for the mistakes of our generation thus aleviating the pressures from the next generation(s). Are we up to it?

Nuff said.

Article Source: http://www.marketingarticlebank.com

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