Let's first begin with the basics. The basic players that brought this upon us, are the mortgage brokers and companies, investment bankers, banks, and of course, the self-indulged individuals. The logic flows like this: most people want a home because it is the American dream or it is a good investment. This is true. It is a great investment but during a downturn or housing price correction like we are in now, it turns sour fast. Those who play the housing market like it was the stock market are now left with duds. These individuals brought this on themselves buy playing this game, knowing full well the dangerous downside.
Next you have the average citizen who just want to buy a house. Instead of buying a house that is within reality of his/her income, these individuals think big. Why not? You have these mortgage brokers and banks who would love to give you a big, fat check. The bigger the better was their motto since they made more money. And how about credit? What credit? As long as you can write down on a sheet of paper you annual income and sign it, it was good to go; no need to verify.
In turn, you have investment bankers
buying these mortgages and reselling them to foreign investors duping
them into thinking it is a fine and dandy investment. Little did they
know it was just a ticking time bomb waiting to explode.
Now comes 2008, supposedly in Chinese culture, a fortune filled year. Unfortunately, it is a disastrous year to date. Big investment banks and regular banks have gone under, while Fannie Mae and Freddie Mac seek protection by the Government.
The Bush administration along with Henry Paulson and Ben Bernanke has suggested a whopping $700 billion dollar Government bailout to alleviate the problem. My question to them and everyone who agrees with them is why. Why are we taking $2,300 from every women, men and child (700 billion dollars divided by roughly 3 million people) in this country and buying a bunch of worthless bad debt. Bad debt created by irresponsible people and companies. These are the same people that a few years ago raked in millions and tens of millions of dollars from these shady investments. A bailout is nothing more than saying what they did was ok. It is like saying that you can make lots of money and at the same time, don't worry about any repercussions because the Government is here to help absorb it.
By bailing out these companies, we have gone against our core principal as well. Capitalism and free market.
The time has come for the market to correct itself from the ridiculous housing prices in some parts of the country namely California and Florida, and also weed and rid itself the companies that were just plain greedy. No one should feel sorry for them. They brought it on themselves and they need to suffer the consequences.
The investment bankers, whom banked on over $200,000 average in bonuses a few years back, should also suffer the consequences of playing other people's money and making risky and ruthless investments.
Lastly, for the irresponsible and over exerted homebuyers. Let this be a harsh lesson in the basic concept of not spending more than you make. If you don't have the means, this is what is going to happen. It's a tough lesson but a lesson that needs to be taught.
Here is my final thought. If the Government feels that itchy about needing to somehow spend $700 billion of our hard working money, then why not just give $2,300 to every men, women, and child. That should definitely boost the economy.