Friday, October 3, 2008

The Financial Bailout

Watching CNN earlier today, I saw part of the discussion and the following vote that was taken that approved the bailout of the financial sector. The emails read by the CNN commentators were overwhelmingly against the bailout and CNN was prompt to present Congressional views that while they didn't like the bailout, either, it was that or something worse down the road.

Basically, I agree with those who oppose the bailout. To those who bought homes when the market was high, I ask, "What were you thinking?!" Only people with money to burn can afford to buy without waiting for a sale. Everybody else has to stay where they are or rent until the housing market swings downward. Those who didn't wait, got that for which they signed up. We don't need to bail them out from their lack of patience.

Those who got loans without knowing exactly what their future payments were going to be were just plain stupid. They may have thought they'd never hand a signed blank check to a stranger, but that's essentially what they did by taking out loans that have future payments that are adjustable. Why they never considered that their future payments could be too much for them to pay, I have no idea. I don't believe the rest of us should bail them out because doing so would interfere with their education. There's no better cure for stupidity than going through the school of hard knocks.

The money lenders who gave those loans are loan sharks and crooks. They don't need to be bailed out, either.

Overall, the situation is that of predators gobbling up the prey. The law of the jungle. The survival of the fittest. I wish it was a situation of the greedy being hoisted by their own petard.

So, why are we bailing them out?

Supposedly, it's because the ever-expanding ripples eventually touch everyone and everything in the pond. It's so the good, financially responsible citizens who form the backbone of America may continue to function. It's disturbing that those who haven't contributed to or participated in the problem have to bear the burden of the solution that may turn out to be nothing more than a quick, stick-on bandage.

What makes me angry, though, are people like Karen Trainer and her husband who simply walk away from the contractual obligations to which they committed themselves voluntarily:

"As a successful professional, Karen could comfortably have managed the higher mortgage payments her bank demanded.

Instead, she decided to stop her mortgage payments altogether and let her bank repossess her apartment.

Her credit record will be badly damaged by the decision, but Ms Trainer expects this to recover soon.

'Generally speaking, within 5 years you are about back where you were, so my husband and I decided we'll take the hit and live with it.'"

It's shameful that Trainer and the others who bought when the market was high and were able to make their loan payments are too avaricious or too short-sighted to see that their depreciated home values would eventually recover at the next up-swing of the market's cycle. All they had to do was wait it out instead of walking away from obligations that they were well able to meet.

As with bankruptcy laws, I would like to have changes instituted that will deter people of low moral fiber like Karen Trainer from taking advantage of the system and leaving the rest of us to clean up their mess.

My two cents.

Psalms 37:21a. The wicked borroweth, and payeth not again...

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