The Government’s $700 Billion Bailout

The government has decided they will privatize profits, and socialize losses – but only for big corporations that are poorly run. You as a common citizen will not receive such treatment, and unlike the large corporations you will be held responsible for your poor decisions.

The government isn’t interested in punishing the crooks who drove these companies into the ground, cost thousands of people their jobs, and who generated trillions in investor losses. They want to bail these companies out with OUR tax payer money and without our approval. Doesn’t this just sound wrong?! We the people are going to bail these corporations out against our will.

Your elected officials are feeding you misrepresentations. They are feeding you exaggerations. They are feeding you myths. They are feeding you assumptions that cannot be proven. Not a single elected official has taken the time to carefully explain why it is we need to spend $700,000,000,000 of taxpayers money. They only tell you that we need to, otherwise we will have another Great Depression.

So let’s take a step back and think about this for a minute. Do you really think banks will stop lending money? That’s how they make money! If banks stop lending you money, then they go out of business. This isn’t going to happen. There are over 7,100 commercial banks in the United States and only a handful have failed. These 7000+ banks are still more than happy, and capable, of lending you money for a car, house, RV, boat or whatever it is you want. The credit is not drying up. Go down to your local bank and take out a loan. I just did and bought a brand new Ford Mustang V8.

The government has no clue as to whether this $700 billion bail out will work. Meaning, they have no idea if this will be enough to bailout the fat cat bankers. It could be that this bail out requires another $500,000,000,000 more. It’s our money, the tax payers money, they are giving away.

Has the free market or capitalist system failed us? No, No, and No. What has failed us is that government has tried to socialize housing; everyone deserves a house no matter their credit or income. Government has injected all sorts of incentives for people who don’t make enough or have bad credit so that pretty much anyone can get a loan for a house. Housing sales and construction went through the roof the last few years because anyone qualified for one of these extremely high risk loans. Problem is, these government incentives are not a free market and they artificially prop up the housing market. This is not capitalism.

In comes supply and demand …

As more people are able to afford houses, and supply starts to run low, more houses are created to meet demand or house prices rise. As house prices rise, one needs more money to buy one. The bad banks started making up weird loans like the 125% interest only 3-year ARM (Adjustable Rate Mortgage). Over time, the market corrects itself naturally. As a result, interest rates rise, and those ARMs readjust to a higher rate. You end up with a lot of people who simply can’t afford their mortgages anymore.

Houses are no longer valued at their original price. A $500,000 house is now worth $300,000, and the bad bank is stuck with a $200,000 loss because they can only sell the home for $300,000. Multiply this by millions of people who bought homes they should have never qualified for and you see the Banks’ problem.

“We have been given no credible assurances that this plan will work. We could very well spend $700 billion, or a trillion, and not resolve the crisis.”

The government says we will make a profit on this $700 billion dollar loan that’s being forced down our throats. Really? Why will the government succeed where all these other companies have failed? It’s a lie. You will not be getting a check back from the government. Trust me. You will be paying back this loan with your own money for decades to come. They will find some way to get the money from us. We the taxpayers foot the governments bill.

Yes, some people are losing their lines of credit and houses. That is most unfortunate. But, this bill will do nothing to help these people. This bill will only help the banks and make more unqualified people able to afford more bad loans.

It’s time we bring control back into our own hands. Let’s vote these government crooks out of office that have forced us to spend $700 billion of our money on something for which we do not approve nor do we have any say in.

UPDATE: It’s now November 3, 2009 and as we can see, there has been no benefit from the Bail Out. Barack Obama will try to tell you that 670,000+ jobs have been created or saved. But what exactly does he mean by saved? And if jobs were created by the bail out money, what money is going to sustain those jobs? It was all a scam at our expense to bail out the banks.

GM and Chevy continue to deteriorate despite collecting billions in bailouts. Sales of GM are -44%. In comparison, Ford which took no bailout money was only -5% in sales over the same period. The cash for clunkers was a failure. We now know it cost you the taxpayer about $24,000 for every $3500 handed out by the government in support of this program. This money was spent on the destruction of the old cars, bureaucracies, and “other” expenses. And just today, the White House said the taxpayers will not be repaid for their involuntary bailout of these companies. No surprise.

The White House has also said that all the benefits from the Stimulus Package have already occurred. After the 4th quarter of 2009, little to no benefit will be gained from the Stimulus Package. I’m going to make another prediction … of the bail out money that remains, and after they realize the bailout hasn’t worked, they will find something else to spend our money on. We won’t be getting back a dime.

UPDATE: It’s now May 16th, 2021. Fun reading old posts like this. Especially when they are right. The debt now is more than double what it was and the 10-year interest rate is half as much. We still haven’t gotten our money back from the original bailout, the debt is higher, and we are now paying people not to work. Oh man, this won’t end good.

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