This is a new feature on MNATO - weekly posts every Tuesday offering my two cents about various things... so basically my unsolicited opinion! Enjoy-
Two Cent Tuesday - The Great Bailout
So it's no news to everyone that there is a huge controversy in governmental proceedings as of late... the proverbial bailout of banks, the auto industry, and of American homebuyers. Each of these groups of people is facing devastating financial loss or bankruptcy without the help of ole Uncle Sam via the new economic stabilization (more like rescue) plan - the bailout.
The problem I have with bailing out these people? They made bad decisions, and now are expecting the great American taxpayer to pull them out of their pits.
Hmmmm... whenever I've made poor financial decisions, it's been up to me to deal with the consequences.
So now we have banks - a group of highly educated and highly compensated people whose job it is to handle money - our money - and rather than do so responsibly, they lent it out like it was 1 cent candy to every Tom, Dick and Harry that decided they needed or wanted it.
And the American public? They snatched up that borrowed money and used it to buy stuff, going along with the old cliche of keeping up with the Jones'. They bought vehicles for the price of a small home in the town where I was raised, and financed them over 8-9 years. They bought brand new trucks with $13000 lift packages (it's a Texas thing) for their high school student sons. They bought $500000 homes with all of the upgrades on an adjustable-rate mortgage with no money down when their annual household income wasn't enough to cover even the starting payment. (According to Dave, your mortgage payment should be no more than 25% of your take-home pay, on a 15 year mortgage.)
The auto and home industries responded to this consumer mentality and produced bigger and better autos and homes to meet the demand.
What does the American public do? Upgrade, baby. Yep. Get rid of that truck that's now a year old and get a new one. Sell that $500000 home and get a $750000 home.
And the banks? Just give out $750000 bonuses!
It's a nasty cycle.
Shame on them.
Because of these groups' poor decisions and the government's choice to give them a slap on the wrist and billions of dollars, the average American, the "Joe Six Pack", the middle-class worker - they're all going to end up paying. I'm going to end up paying.
And yet, I'll still be making the payment for the used vehicle I bought and the mortgage for the home we built within our means... without the assistance of the United States government.
Sounds like a sellout to me...
Only time will tell if we've learned our lessons.