Hi all,
I've been following the recent events in DC regarding the $700B bailout and have had enough before feeling compelled to write about it.
My brief background: 40 year old airline captain making $78K annually, politically I'm an independent who has voted for different parties over the last 20 years, and I do not own any stock of any of the recently failed companies, nor do I have a home in foreclosure.
I invite everyone to comment and give feedback on this post.
The recent bailout plan seems to be the latest sham on the taxpayers of this country. The media, and financial professionals are calling it a failure of the markets, and a huge financial crisis.
Obviously it is a disaster, but a failing of the markets? How can it be a failure of the markets when it seems that the markets are working fine? Is it not a rule in the markets that when bad investments are made, those making the investments are punished? (i.e.-banks making loans backing the purchase of depreciating homes, or making loans at an unbelievable LTV's on assets with borrowers of insufficient credit)
The market fundamentalists who helped to create this disaster did a great job espousing the benefits of free markets, while they worked their magic in creating opportunities for them to make incredibly risky investments. Now that these investment have turned into non-performing ones, they want government handouts?
Where is the fundamental argument that the void left in the wake of these incompetently run financial behemoths, will eventually be filled by other companies recognizing the underserved market for credit? In addition, won't these new companies be purchasing the non-performing assets for pennies on the dollar, probably allowing them to resell/restructure them at a profit?
The government wants to purchase these assets, but in the last 8 years has the government shown any financial competence that would allow them to do so advantageously with $700 Billion of our money?
The bailout seems to be a knee jerk reaction to fear caused by a recessionary market, foreclosures whose blame at least partially rests on the borrowers of money who did it irresponsibly, and a government overrun with Wall Street cronies and no representation from middle America.
Financial blood will be in the street, but the markets will recover. This shaking out needs to happen before a healthy recovery can take place, along with some regulatory oversight to prevent similar occurrences.
