Wall Street Bailout or Recovery Plan?
John DeLellis asked:
The bailout plan and the bailout bill involve many complex issues that the average person would have some difficulty understanding. When you add the fact that Americans find themselves in a politically charged environment (during an election year), It makes it almost impossible to get a clear take on the issues. I see the Bailout as a way to fix what has been called a credit contraction problem. Reducing the Problem to it’s simplest form.
Forecloses = Reduces the value of mortgage backed securities = Banks can not sell the mortgages and generate additional money to lend to consumers and business = Business can not get loans for payroll, operations, and growth = loss of jobs for the average wage earner/taxpayer.
The bailout should, in theory, fix the strangle hold the foreclosures have on the credit availability for consumers and businesses. The government can rehabilitate these loans by providing some relief for the homeowners by lowering payments, increasing loan terms (40years), lowering interest rates and restructuring the bad loans. A long term solution may depend on job and economic growth within the United States.
The bailout is a good investment from the government’s perspective because it will serve to maintain the operation of the economic engine that generates the nation’s wealth -the US economy. Their is a concern that the bailout bill is yet another overweening power grab that leaves decision making on how the bailout is conducted and administered totally at the discretion of the Treasury Secretary (currently Hank Paulson). The problem with the bailout is not only socializing the losses, but also that without regulatory reform, it is allowing the underlying structural problems in the financial system to remain unrepaired.
The bailout is important, because it reflects apparent faith in a discredited economic theory known as supply-side or “trickle-down” which holds that to help everyone, the government needs only to allow the rich to have more money, who will use it to create jobs. I believe people act in their own self interest. The wealthy are more likely to tie money up or spend and invest it abroad instead of America. Now, there is risk, but the alternative is something that would affect every single one of us, our money in banks and our jobs.
The goal of the bailout is to try and keep the real bubble that started this, the mortgage mess, from dragging down everything else in it’s wake. Some experts say the bailout is good news for homebuyers and homeowners hoping to refinance, as the situation may lead to lower interest rates. As the government prepares for its largest financial bailout in history, both John McCain and Barack Obama believe the bailout is fundamentally a good thing, but that there should be more oversight built into the $700-billion plan to stabilize the financial markets. Finally, if the bailout is inevitable, then Congress should only pass a bailout and not tack on other measures to the legislation to meet the demands of individual constituents or special interests.
The bailout plan and the bailout bill involve many complex issues that the average person would have some difficulty understanding. When you add the fact that Americans find themselves in a politically charged environment (during an election year), It makes it almost impossible to get a clear take on the issues. I see the Bailout as a way to fix what has been called a credit contraction problem. Reducing the Problem to it’s simplest form.
Forecloses = Reduces the value of mortgage backed securities = Banks can not sell the mortgages and generate additional money to lend to consumers and business = Business can not get loans for payroll, operations, and growth = loss of jobs for the average wage earner/taxpayer.
The bailout should, in theory, fix the strangle hold the foreclosures have on the credit availability for consumers and businesses. The government can rehabilitate these loans by providing some relief for the homeowners by lowering payments, increasing loan terms (40years), lowering interest rates and restructuring the bad loans. A long term solution may depend on job and economic growth within the United States.
The bailout is a good investment from the government’s perspective because it will serve to maintain the operation of the economic engine that generates the nation’s wealth -the US economy. Their is a concern that the bailout bill is yet another overweening power grab that leaves decision making on how the bailout is conducted and administered totally at the discretion of the Treasury Secretary (currently Hank Paulson). The problem with the bailout is not only socializing the losses, but also that without regulatory reform, it is allowing the underlying structural problems in the financial system to remain unrepaired.
The bailout is important, because it reflects apparent faith in a discredited economic theory known as supply-side or “trickle-down” which holds that to help everyone, the government needs only to allow the rich to have more money, who will use it to create jobs. I believe people act in their own self interest. The wealthy are more likely to tie money up or spend and invest it abroad instead of America. Now, there is risk, but the alternative is something that would affect every single one of us, our money in banks and our jobs.
The goal of the bailout is to try and keep the real bubble that started this, the mortgage mess, from dragging down everything else in it’s wake. Some experts say the bailout is good news for homebuyers and homeowners hoping to refinance, as the situation may lead to lower interest rates. As the government prepares for its largest financial bailout in history, both John McCain and Barack Obama believe the bailout is fundamentally a good thing, but that there should be more oversight built into the $700-billion plan to stabilize the financial markets. Finally, if the bailout is inevitable, then Congress should only pass a bailout and not tack on other measures to the legislation to meet the demands of individual constituents or special interests.