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Thursday, February 26, 2009

Are Bailouts Sending the Wrong Message?

Every American is looking for the economy to turn around. As job losses mount, the impact to people and families becomes more real to more people. Most citizens realize at this point there are no silver bullets or easy answers. The real question is whether the billions of dollars being thrown at potential solutions are really going to bring us back from the brink or are they just going to saddle future generations with more debt they will not be able to afford.

More importantly, should bail out funds be used to compensate for self inflicted problems or should market forces be allowed to correct the housing and credit markets? Also, responsible homeowners, borrowers, savers, and taxpayers are feeling doubly screwed. For those who acted responsibly throughout the good times, those that bought homes within their means, borrowed within their capacity to repay, kept saving for the future instead of mortgaging against it (and their home's value), and paid taxes are now going to feel the brunt by paying for the bailouts. I don't even want to talk about what has happened to retirement plans.

Most people who have been responsible with their finances and who don't loose a job (through no fault of their own) are generally going to be able to weather the storm. They have planned for it albeit not for this magnitude but they will still get by.

Hopefully the Federal Government bailouts can 1) Stop the fall, 2) Begin a recovery, 3) Help individuals and families that truly deserve the help, 4) Not overly benefit those who created the mess, 5) Still convince people that they must live within their means.

When you borrow against your future, you take a huge gamble and should be expected to suffer the pain of the risks accepted.

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