Bailout: Time for common sense
The sky is not falling. You will not lose your home, your savings, or your retirement. If the government fails to nationalize Frannie Mae and Freddie Mac, the world as we know it will not come to an end. Contrary to the fear-mongering the Drive-by Media and certain politicians have been slinging about, there is no foregone doom that makes this wrong-headed socialization of America's housing market inevitable.
The proposal to bail out sub-prime borrowers may, on an emotional level, seem humane. But when viewed in the harsh light of reality, it is economically and morally wrong.
Set aside fear, think it through
If you remember nothing else after reading this article, remember this: NO ONE -- nobody at all -- knows what will happen with or without a bailout. It's all speculation.
If the government did nothing but sell off the assets of the get-rich-quick mortgage speculators, no one knows what would happen, but all free markets have a way of readjusting, over time, based on value. Certainly banks would fail, just as businesses in the free market fail every day. Formerly super-inflated housing prices would readjust to normal levels, just as all market prices are subject to normal fluctuation.
But the process of readjustment, while perhaps economically shaky in the short term, would at least be naturally-occurring, smooth, and rational -- without burdening American taxpayers with a minimum additional $1 trillion in national debt. Most important, we would all stop living in fear based upon distortions of the truth designed to promote panic.
Why bailout is bad
Above everything else, a bailout is morally wrong. It diametrically opposes the principle of basic fairness embedded in the American persona. It would provide handouts to the greedy and the undeserving. Greed and foolishness will be rewarded while responsible Americans will be harshly burdened, simply because they follow the rules, do the right thing, and don't try to make a fast buck at the expense of others.
The proposed bailout, or socialization of America's housing, will:
Require responsible Americans to pay for the acts of greedy bankers, mortgage brokers, land flippers, lending speculators, and over-extended home-borrowers. In other words, the government wants you to pay for the greedy blunders of others -- and yes, those home buyers who knew they couldn't afford a home but thought they could get something for nothing are just as guilty of greed as anyone else.
Price out of the housing market those responsible Americans who have been patiently saving to buy a house that they can actually afford. The current housing correction is necessary to remedy the inflated run-up in housing prices over the past decade. By bailing out the housing market, the government will prevent housing prices from returning to affordable levels, thereby ensuring that renters will not be able to buy a home and current homeowners will not be able to upgrade.
Send the wrong message about personal responsibility. It tells Americans in no uncertain terms that their financial decisions have no consequences; the government will pick up the tab.
Allow banks, mortgage brokers, speculators, and borrowers to benefit from abuse of the system. By doing so, it will encourage these people to act irresponsibly in the future.
Force Americans who acted responsibly to pay for those who did not. The average American -- who saved and scrimped for years to buy a house, but could not because speculators and high-risk borrowers boosted home prices beyond affordability -- will now be forced to pay for the homes of the less scrupulous.
Prop up over-inflated housing prices, thereby putting home ownership out of reach for young families and responsible Americans. The housing market needs the correction that the bailout seeks to prevent because the average American cannot afford to purchase a home.
Shift the risks of falling market prices from financially secure banks to the American taxpayer. As a result, either taxes or the federal deficit will dramatically rise.
Changing the identity of America's economy
Such a short-sighted proposal is contrary to the free market principles upon which our economy is based. It will effectively thwart normal free market correction, allow Big Government to take over the entire American housing market, and will generate negative social and economic effects that will be both severe and long-term.
If you rent and think that you won't be affected by the burden of paying off the folly of others, think again. It doesn't matter if you're a renter who chose not to jump into the housing pool. Congress will make sure that it is your responsibility to pay up for others' irresponsibility.
Hindsight has allowed today's "experts" to pontificate about what should have been done in the past, as well as what should be done in the future. As for the present, they eagerly propagandize for the most far-reaching government takeover of a massive part of the American economy in the nation's history.
The current congressional majority wants the American taxpayer to subsidize not only the buyout of bad loans that have yet to fail, but also individuals who shouldn't have bought houses in the first place.
We need the courage to allow the market to handle the entire process, come what may. This course is better than creating another trillion or so dollars of debt to bail out mismanaged businesses and greedy borrowers ...
... or allowing the same Big Government meddling that caused the mess to have even more control over our personal lives.