We're just rewarding bad behavior and punishing good. The responsible folks, who don't borrow beyond their means and make all their payments, have to bail out the irresponsible borrowers who took loans they couldn't pay back, and the unscrupulous banks that lent money to irresponsible borrowers.People and institutions that make bad financial decisions should pay for those decisions. Where's my interest rate reduction, or my loan principal write-down? Oh, that's right, I don't get any breaks, because I pay my bills, so I get punished for my financial responsibility. I just have to pay for your bail out.
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Actually, I wouldn't say it is rewarding the bad behavior.
The owners (stock holders) of those banks already lost almost all their money.
And if there is no bailout, everyone will be punished, in term of economy and jobs. With bailout, at least we won't get into Great Depression 2.
Without bailout, the chance of anyone getting any mortgage is close to nil for the next year or so. It won't matter whether the price tanks...because it will because nobody can buy it. The renters will be locked out of the market, not by price, but by financing (or lack of).
With bailout, the price will still tank. However, buyers will hopefully get reasonable financing options, so we can actually take advantage of the situation.
I hope some people like to see others suffering.... to me, I don't care whether others suffer. I only care if I can take advantage of the situation.
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If the bailout works, it will work because it re-instills confidence in the current economic system. Economists, even today, only really can explain about half of all economic activity.The neoclassical model is particularly bad at modeling actual human behavior because humans don't tend to act like the "rational man" of their theories.
The overwhelming majority of economists agree that the New Deal lessened the effect of the Great Depression, the main problem is that the stimulus was not sufficient enough. This was proven when we entered WWII and government spending rose to 50% of the economy and full employment followed. Even during the period before the war, the economy grew at an average of 9-11%, the fastest economic growth period we have ever seen outside of wartime.
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The overwhelming majority of economists didn't think there was a housing bubble either. In truth, the overwhelming majority of economists are fools
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If we're going to have a socialized mortgage market then let's at least make sure to socialize the profits as well as the losses.
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and the band plays in......
