The bailout will only lead to more of the same. The idea of moral hazard will really become an issue in the next few years as well. Moral hazard is when companies take things less seriously, or make riskier investments, because if they go wrong, the government will bail them out. This removes all responsibility and also the economic freedoms of others. We should be able to spend our hard earned money how we want, it is ours in the first place.
It amazes me how we are spending $778B to "boost" the economy. This "boost" is only putting us farther in debt, which will not hurt in the short run, but this will cause many problems for my generation and my children's generation. Is $5,000,000,000 (yes, billion) to the United Nations really necessary to boost our economy? That money is leaving the US, which is the root of the problem. Not to mention all of the money that will be lost in transition, which is what we saw with the TARP (bank bailout) bill.
Hopefully this magically works out, but I seriously doubt it. Obama has been very popular with the public ( a 76% approval rating), but so did George Bush at the same time during his presidency.
If I were president, I would make citizens and businesses more responsible for their actions, giving people their money back into their own pockets, which will create jobs and lower unemployment, without inflation spiraling out of control. I would eliminate the income tax, which would be possible by having a foreign policy we can afford, bases in 180+ countries is unnecessary and who said that we were the world police. We have problems that we need to fix domestically.
I would also eliminate many failing government programs, such as the IRS, DEA, FDIC, FCC, the Federal reserve and others as well. The IRS is unnecessary because taxes are too high and if we reduced spending we could afford to do without it. The DEA has done a horrific job on the war on drugs; Pineapple Express was the #1 movie on iTunes for heavens sake! We have spent millions of dollars to stop American's from hurting themselves. I would give people the right to do what they want with their bodies, and it is not the governments place to give you moral standards. As long as you are not hurting others, there should not be a problem. The FDIC creates moral hazard and the FCC violates the constitution (freedom of expression). The fed has caused the dollar to depreciate 95% since it was created.
I like Ron Paul too, but not enough to vote for him. I do, however, agree with much of what you say here. It is sad that people are losing their homes to foreclosure on mortgages, but they made the mistake of buying more house than they could afford and believing that real estate prices were realistic, not ridiculously inflated. Now that a $100,000 house is back to $100,000, you just have to wonder why anyone ever would have paid $400,000 for it. So I blame the individuals, but I also blame the banks, who persuaded everyone to take out these sub-prime loans. So while I worry about what would happen without the bailout, it is maddening to see irresponsible business practices go unpunished. Good post, and I hope others respond with their thoughts on Libertarianism, big government, and the bailouts, like to the automakers.
ReplyDeleteI agree very strongly with cec’s response about culpability and the sub-prime mortgage crisis. In the end, the homeowner is the final decision maker and must take all responsibility for their actions. For most Americans, they only purchase one or two homes in their lifetime, so it is of great importance to complete their due diligence before signing the paperwork. I find it embarrassing to the American markets and economy that we can allow such a catastrophe to occur in our housing market less than 20 years after the Japanese housing market collapsed. A high school economics student could predict the popping of our housing bubble, and yet Americans continued to pour their money into risky investments. As sad as it is to say: the lessons that the sub-prime mortgage crisis has taught to Americans may have been a blessing in disguise. Coming off the ‘long boom’ or the person of economic upturn from after the ’91 recession until the December ’07 peak (excluding the ’01 hiccup), Americans were too loose with their money. This instance has created the mindset that we are not invincible, and that our money needs to taken care. This recession will end, but the mindset about investing will stick with Americans for a long time and we will be better off in the long run.
ReplyDeleteAlthough chris raises some interesting points, I disagree with eliminating some government programs. I can very conservative and dream of small government, but I do not think that eliminating the IRS, FDIC, or the Fed will solve any problems. If we scrap these programs we will likely be much worse off as a nation. The IRS does not determine how American’s are tax, they just collect what the President set as the tax rate. Taxes are necessary for our country to run and thrive (not to mention multiple stimulus packages, bailouts, and trillion dollar budgets!). The FDIC is a great program that stops the occurrence of back runs, and I doubt has any effect on Moral Hazard. Most American’s do not have $100,000 sitting in the bank, and high wealth individuals, like Warren Buffet, need to make smart decisions because there is no one guaranteeing their money. The Federal Reserve Bank is a separate entity from the U.S. government and it is not Bernanke’s fault for the dollar’s deprecation, since he has preformed phenomenally in this downturn. Other that the President naming the Bank’s chairman and all profits going to the U.S. government, the Fed is rather independent of fiscal policy.
It is clear that the economists in Washington are strict Keynesians, and they are doing their spending to pull us out of this recession. We are only in a business cycle right now, so the elimination of government programs, I feel, is unnecessary.