Thursday, October 09, 2008

My Thoughts on Economics (bo-ring!)

Is anyone else completely confused? I don't know much about politics or economics, so what I have to say might make me sound completely stupid, but I wanted to vent a little bit about what I've been thinking about lately. I am neither republican nor democrat, I'm just a very confused American citizen.

the big Bank Bailout... What is going on? How did congress push this bill through so ridiculously fast? Why did Bush say that if we didn't do it the entire world would collapse? Doesn't that sound a bit extreme? I mean, it's scary - I don't really want to have to start hunting rabbits for my dinner. But is it true? Really? Would the world collapse, or just a few big banks? And if a few big banks collapse, what harm does that do, really? I mean, what would happen to all the "bad mortgages" if the banks collapsed? Or all the other loans? I guess if you owe money to a person, and the person dies, you don't have to worry about paying them back, right? So if you owed money to a bank, and the bank went out of business, wouldn't you just get to keep the money? I mean, if the bank no longer exists, then who's going to come after you? Who would you make payments to? That would be great! All the people who got screwed into sneaky loans would get to keep their homes and get compensated for their pain by having their debts basically forgiven.

I heard the actual bill is 450 pages! How does it take 450 pages to say "we're going to buy bad mortgages"? I also heard that there was a line in the bill asking for money for "rum." What does that mean? And other things (I can't remember what) that had nothing whatsoever to do with buying out banks. Why? Why can't they just come up with the exact figure they need to buy the mortgages, and use THAT money for THAT purpose? Why on EARTH would we possibly want to give ONE MAN (the treasury guy) a BLANK CHECK and say "do whatever the hell you want with this"?

Personally, I felt extremely uncomfortable with the whole thing, I felt like it was shady. I mean, sure, maybe it was necessary to bail out the banks, but please, President Bush, don't use it as a way of manipulating us into giving you more money for whatever it is you want money for. And even if it WAS necessary to bail out the banks, why should it come out of MY money? I tell you what... NO BANK HAS EVER BAILED ME OUT WHEN I WAS ABOUT TO SINK. Ok, one bank was kind enough to refinance our mortgage for us... but in the end, it's still more money for that bank. No bank (or the government, for that matter) has ever stepped in and said "Oh, wow, you guys are really struggling. Here, let me just buy up these debts you have - I'll just pay them off for you, and then you can go about your merry way and the world won't collapse." Nope, we had to TAKE RESPONSIBILITY for the decisions (mistakes) we'd made in the past, and PAY OFF OUR OWN DEBT. We've struggled, sacrificed, and worked our asses off for the last 4 years to get to where we are today, which is still no where near wealthy. Now we can get by, but we still don't have money for too much extra. My point is, why should I now be forced to step in and "bail out" companies whose CEO's make as much money in a week as I make in a year? How does the former CEO of Merryll Lynch get a $160 million severance package from a company that is going under??? I wonder if the 1500 people in Elkhart who've been laid off from RV factories have gotten a severance package? My guess is no. I'm willing to bet that if you take the top 10 or so employees from the banks that need help, they could personally fund the "bail out" and it wouldn't even hurt them. That's just my perspective, but I have to say I'm pretty pissed about this whole thing. I haven't heard a single person (in my circle of people) say they thought this was a good idea. And yet, it was presented to us as our only option.

Ok, I guess that's all the rambling I have. Like I said, I'm sure I sound ignorant to you people who understand economics and politics, but maybe you can help enlighten me. Seriously, I'd appreciate any insight anyone has.


  1. hey you! somehow, you read and commented on my post before i was even done with it! weird!

    about your ramblings - i don't get it either. and ben listens to tons of talk radio all day and is pretty informed and smart and level-headed and he doesn't really get it either.

    i do know one thing. it was pretty important to do something - ben explained it all to me, i sort of got it. BUT, it didn't have to be done the way they did it. and it wasn't up to president bush how it got done. there was a whole lot of politics (ha. ha.) over how it all got done, with this one adding that thing for their own benefit and that person adding that thing to sweeten the deal for someone else to get that person to sign it - like if i added a couple hundred thousand to the bill for my husband's business, and then to get you to sign it, i added a couple hundred thousand to the bill for families in elkhart who had their roofs damaged in the big storm. stupid stuff like that. and not enough people had the spine to stand up and say - NO. i'm not signing it when it looks like that. we don't have enough people in washington who will stand up for us - the normal every day people who are doing our best and would like to not have to worry about how much gorceries cost.

    anyway - that's my addition to your rant . . .

  2. Stephen Colbert put it best: if you're going to screw up, screw up on a scale so big that the government just has to do something about it.

    Your concerns don't sound stupid at all, Jeannine. There are plenty of financial people in this country who hate the bailout package, for a lot of the reasons you mentioned and more.

    I understand that the biggest problem the bailout was trying to address was a credit crisis. There was the potential, if these companies went under, for people to be unable to get credit: in specifics that means, businesses would be unable to write paychecks, because the banks wouldn't have the money.

    But I personally imagine that there's always someone with money, so I'm with you. Let these bad businesses die, if they're going to make bad business decisions. We have to be responsible for our decisions, they should be responsible for theirs. It's completely unjust.

    Beyond that, there's little confidence that the bailout will really do anything to turn the economy around. It may have saved us temporarily from hitting rock bottom, but the market is still unstable. There are definitely other, better ways for us to turn things around.

    Personally, I feel the bailout merely perpetuated a bad system. It was the economics of preservation, rather than innovation and production. If the government takes away the consequences, who's likely to change? It stinks.

  3. Thanks for your comments, people! I'm glad to know that my thoughts make sense, and that you guys pretty much feel the same way.

    I still don't understand the thing about businesses being able to write checks. Isn't our money (that is in banks) federally insured? So if I'm a business owner, and my account is with a bank that goes under, shouldn't I still have my money? THAT's where the government can step in and say "Ok, Mr. Owner of Business, here's your reimbursement for the money you had invested in this bank, take it and put it in another bank." Or do businesses actually borrow money to write their paychecks? Then it would be considered a loan, in which case there would be no money to loan out. But then, can't the business just go to another bank?