Why do We Need to Bail Out Wall Street?
Today the negotiations on a Wall Street bail out seem to have fallen apart. Neither side was able to come up with a compromise that would end the stalemate. The biggest “problem” in getting a deal done appears to be house Republicans. There is no surprise there, this is where the last of the conservatives reside. House Republicans are the ones that killed the illegal immigration bill and they are now holding firm on this issue.
I suppose from that first paragraph you can tell that I am against this Wall Street bail out bill. The president keeps telling us that we need to come to an agreement immediately, as do many other politicians, including McCain and Obama, but why? Please explain to me why taxpayers who play by the rules should be responsible for bailing out those who gamble on the stock market knowing that they could lose. Tell me why taxpayers should foot the bill for people who took out mortgages that they knew they couldn’t pay. And please tell me why the hell taxpayers should pay to bail out the companies who gave mortgages to people that they also knew couldn’t pay them back. Finally, tell me why the taxpayers should bail out the government that told the banks that they had to give mortgages to people that couldn’t afford them. If you can do that than I will jump on board. Actually, no I won’t, there is no reason that people who work hard and play by the rules should have to help those that don’t.
In their haste to do something have they thought about what they are proposing? And if they have, do they think that this is what the American people want? Just because they do something doesn’t mean they are doing the right thing.
First the government took over the mortgage companies thus becoming the nations biggest mortgage lender, and now they are proposing taking over the United States economic system. These are big government nationalization programs. What’s next, a bail out (government takeover) of the airlines and auto industries? Both are in trouble, it is not inconceivable. We know nationalized health-care is on the docket also.
This is a threat to our founding as a free market, capitalistic, constitutional republic and a move toward a socialistic form of government. And it is only going to get worse under the next administration no matter who it is.
Remember, it was Ronald Reagan who said, “The government is not the solution to our problems; the government is the problem.” Isn’t that the truth?
Please somebody tell me I am over-reacting, I hope I am. But I fear I am not. Somebody talk me down off the bridge.
America's Watchtower 
I see it over and over again when the government gets heavily involved with anything, it goes to hell in a hand basket.
The opposite is not as desirable as well. When business is given free reign to do what it damn well pleases, you get situations like this (and worse).
Laissez-faire does not really work, there has to be a balance between letting business to do its… well… business and making sure the taxpayer does not get stuck with worthless paper like what is going on now.
LikeLike
Maybe if things get really, really bad, then America will wake up. Liberalism and socialism do not work. Funny that the party that believes in evolution does not want banks and other businesses to naturally evolve (fail and grow again). I know it’s not exclusively the dems fault, there is plenty of blame to go around. But there is also a thing called personal accountability. Remember your Shakespeare, (or is it the Bible? how embarassing) Neither a lender nor a borrower be.
LikeLike
I have the same question as the original author? Why is this bailout necessary? Alot of words are being tossed around about dire economic consequences and panic but at some point the government has to let the economy function on its own and reach some form of equilibrium without an infusion of cash from some outside source. My fear is that we will continue to prop of these failing businesses until even the government with its seemingly endless amout of money will be unable to avert crisis. More so, I feel that prolonging this outcome will make the resulting recesion or depression or dire panic worse then if the government just kept its hands out of the economy in the first place.
But the reason I read this and what I still want to know is why does wallstreet NEED this money? What are the consequences in concrete terms of letting them flounder for their own bad decisions?
LikeLike
To answer the question, the way I understand it is by letting the banks fail, it creates deflation (this is a problem that Japan had a number of years ago). That means the cost of goods and services go down as does everyone’s wages. However, debts don’t decrease which means it becomes harder for people to pay their obligations, which causes more defaults, and which causes more banks to fail.
LikeLike
Is there no better answer that the ones posted by Terrant? I’m no economist, so I hope I’m just not understanding the problem. But it seems to me that there are a number of “at fault” parties – one of which is (and maybe most of which) were the lenders/banks. This bailout seems to benefit an “at fault” party. If the banks fail, why do we care? First, I don’t see the automatic connection to deflation. Second, even if deflation happens, since it only hurts lenders, then who gives a rip.
Regarding the certain deflation – How does bank failure lead to automatic deflation? Has deflation ever occurred when banks didn’t fail? Has deflation ever not occurred when some banks failed?
Second, deflation isn’t necessarily a bad thing. I figure even if banks fail and deflation occurs (all prices go down except for debts) then the only losers will be te lenders – again, an “at fault” party. So if deflation occurs, so what. And if we bail them out, and deflation occurs anyway, do we bail them out again when people can’t pay their debts?
LikeLike
The problem I have with the bailout is the decrease in the value of the dollar, (a bailout could possibly cripple the dollar). Yeah we might maintain our lavish salaries with a bailout, but I think I would rather suffer deflation then a dying dollar.
LikeLike
First of all no banks = no credit = no operating credit loan for the thousands of small businesses throughout america = no loans for buying new houses = Troubled homeowner not being able to refinance = defaulted home loans = Major freakin recession. It not about a free hand out to the jerks on wall street, it’s about not allowing a financial disaster for the rest of us. (although i think any bailout / buyout should include some major shackles for the financial industry)
LikeLike
also in response to B a weak dollar is not the end of the world. in fact it’s a great thing for many businesses who export to other countries. it should also be noted that it makes outsourcing our jobs to foreign countries much, much less attractive.
LikeLike
Deb said about the bailouts…
“Liberalism and socialism do not work. ”
Umm, have you been asleep here lately or did you miss that the folks passing out our tax dollars to the Wall Street white shirts are the GOPers in the Bush administration? However, you did get it half right…Bush is turning the USA into into a socialist nation.
LikeLike
E, if you think that a weak dollar is a great thing then you will probably be thrilled what is going to happen if Japan and China and all those other foreign nations who have been buying our debt decide they want to cash out.
We will have to print money so fast that our dollar will drop like a rock. And our kids and grand kids will never know what hit them!
LikeLike