Government Bail-Out – Risk & Reward
Some folks took risks on buying homes 2-3 years ago with the thought that home prices would continue to increase and they would make off with a good ROI (sometimes with no money down at all). Others took the risk of not buying and possibly seeing the prices of housing running up to a level that those individuals could be priced out of the market forever (like the 1970's steep increases). Paulson/Bernanke are making it sound like they are alleviating risks took by investors -but this can only be done at the expense of others that took risks (and, should be rewarded accordingly when markets show favor to their strategy). Those that have saved money are being robbed through purposeful devaluation of the currency by those that believe that some folks risk taking is more important than others. This is not right -it can not even appear to be right. There is rhetoric which can be used to try & justify such events -but, even the rhetoric doesn't feel right.
So, when a neighbor doesn't pay his VISA card bill at the end of the month, we should all chip in? VISA factors in potential losses -if they do a bad job of this, they might go out of business and people with use AMEX or other companies will pop up instead. In fact, when folks don't pay their credit card bill, VISA (well, via the banks that actually hold the debt) sell that "bad debt" off to collection agencies. Check into it -there's a whole industry out there around bad debt collection. And, guess what, it doesn't involve the debt holder knocking on a few neighbors doors asking them to chip in. I hope that many adamantly oppose both the bailout bill and the whole theory around this anti-capitalistic crap -and specifically harass their elected officials until they get the idea.
What I do KNOW is that Bernanke said quite emphatically at his confirmation hearings that we were not in a housing bubble. How he could reach that conclusion, even in 2004 is a mystery. And he was clearly right on this wasn't he.