Lately I keep getting asked three questions about the bailout and stimulus situation. The questions are; “Could we have done things differently?” “Will the stimulus package work?” “At what cost?” – Here are my answers…
Q: Could we have done things differently?
A: Of course we could have; we spent way too much money. Sure we can blame CEO’s of banks and D.C. Politicians, because it is always easier to point a finger than look within. If the American public (in general) had not been spending in an out-of-control fashion, we may not be here.
I hate the argument it is “their fault” for giving me too much credit or “allowing” me to purchase a home I may not be able to afford – “They” shouldn’t have let me do it. Accept some personal responsibility for Pete’s sake!
If I put someone in front of an all you can eat buffet am I responsible if they overeat? No one made the consumers go out and buy huge gas guzzling cars or flat panel TV’s they couldn’t afford. Again, personal responsibility seemed to have disappeared for a period of time.
Could we have done things differently? Yes. We could have listened when people said, “Live within your means.”
Q: Will the stimulus package work?
A: That really is the million, or should I say “trillion,” dollar question. In a nutshell it is a huge gamble and I would say the odds are 50/50 (and I am trying to be positive). From the sidelines, there are a couple things that concern me when it comes to this being the end-all repair.
For starters, for the most part, you can’t mess with Capitalism – it is survival of the fittest (or should I say “smartest?”). Think about it. In Capitalism when a bad company goes out of business due to poor management or whatever, the next company steps in and fills the void. This creates competition and opportunity. It is also good for the consumer as they have choices. But what happens when you bailout the poorly managed companies? You have gone against the natural order of things. The next company does not get to step up –matter of fact, since they are not getting government help they may go out of business.
Secondly, this is a global issue, not just domestic. If the U.S. was in an isolated situation than I might think the stimulus package would give us the kick-start we need. We are all affected by a global economy so we better hope the other countries are able to pull through as well.
Lastly, what about the money we have already spent? Billions have already been spent (and some improperly) and it had as much affect on the economy as a mosquito hitting a Hummer on the freeway. The last report I read even mentioned we overpaid for some mortgages by as much as $78 Billion! It is one thing to pay too much for milk at the store but another when you are paying Billions incorrectly.
Will the stimulus package work? Flip a Coin.
Q: At what cost?
A: Too much. To begin with, we are spending our kids and grandkids money. Basically we have spent too much for our own generation so we are now tapping into future ones. It is kind of like if you had credit cards, maxed them all out, and then got more cards in your kids name (and ran up those as well). Who is going to be able to pay it back?
Secondly, what if we are wrong? Some politicians, and justly so, are starting to ask a very important question. Is the risk worth the reward? Remember, even if the bailout does jump start the economy, can we pay back the money? Is borrowing that much money from other countries and future generations really the smart thing to do?
If we do nothing the consequences will be tough. No doubt some degree of a Depression. But then things will get back on track. But what if you spend a Trillion dollars and you still end up in a Depression? Then what? You come out of the Depression with a huge debt on your shoulders.
At what cost? Probably future generations of debt (whether is works or not).
Fine, I suppose this is where you look for some witty insights to my mind. A "bio" of sorts. Here is the deal... I ride motorcycles, smoke cigars, golf, kayak, fly, race my car through the mountains, write (a lot), and travel extensively. I am almost old enough not to care what other people think about me...almost. ~Godfadr
I agree that there has been a loss of personal responsibility all around. And we are giving money to corporations and financial institutions in the naive belief that they will spread it around. Unfortunately, many of the dollars in the last bailout were gobbled up by the top management leaving nothing to trickle down to the consumer.
Some have suggested that we simply give this money to the consumer directly. But the financial savvy of a large percentage of American consumers has shown to be lacking.
What makes this hard to swallow are the working class folks who saved and lived frugally and modestly, who only bought small homes that would fit in their budget but now are faced with losing half of their hard earned retirement funds, who have now lost their jobs, and the innocent of this and the next few generations who will have to pay for a long time to cover someone else’s greed and irresponsibility.
Godfather Added: Thanks for the comments Gina. You are absolutely right. It is the people that lived within their means that are starting to get hit – they don’t get a bailout. Yet those in foreclosure will get some sort of help (even the people that never could have afforded the home to begin with).
Good post….I find myself asking pretty much the same questions, and I have to say, you’re a lot more positive on things than I am…..I just put up a post along the same lines, with a little more bite.
This whole thing is so frustrating. I totally agree with you on every account. My husband and I did not buy a house because we couldn’t afford one (even though he will have a decent salary when he finishes his training as a physician). It really pained him to watch everyone else at his stage of life buying cars and homes, and as much as he wanted to do the same, he was responsible. We struggled with one car most of his residency because we could not afford two cars. It is painful to constantly watch people live above their means and then not take any personal responsibility for this economic crisis.
This economic stimulus package scares me. I don’t know if it will work. I am not pleased with the fact that my child (and her children) will have to bear the debt of the generation before her. It isn’t fair.
By the way, I thought you would find this article interesting: http://www.dailykos.com/storyonly/2009/2/9/234340/6189/142/695504
Godfather Added: Great points Rachel. We also stayed much on the sidelines and to this day, I am really glad we did. Also, thanks for the video, I am going to create a post on it!
As i know you have said, they never should have done the bailout. We are selling out kids out!
The whole thing is messed up. I just don’t see how we could have gotten in so much trouble.