(from an Associated Press article)
"WASHINGTON - Federal Reserve Chairman Ben Bernanke bluntly warned Congress on Tuesday it risks a recession, with higher unemployment and increased home foreclosures, if lawmakers fail to pass the Bush administration's $700 billion plan to bail out the financial industry.
Bernanke told the Senate Banking Committee that inaction could leave ordinary businesses unable to borrow the money they need to expand and hire additional employees, while consumers could find themselves unable to finance big-ticket purchases such as cars and homes."
I'm not sure how to feel about the financial crisis in the States right now. On the one hand, I can't believe that, once again, there will be no accountability for the misdeed which brought us to the present situation. I'm not saying who should be held accountable, but between congressmen who write the laws, presidents who push the policy, and bank managers and CEOs who gambled with money that was not theirs, someone should be held accountable. Instead, they are actually arguing in congress as to whether or nor the outgoing CEOs of these bought out failures should be stripped of their "golden parachutes" or not. Golden parachute... another way of saying "more free money in one lump sum than you will make for the rest of your hard-working life." This is an arguable point? Wow. We have one royally screwed up country. What has happened to our world? Where did the accountability go? My father taught me that you should own up to your mistakes... no one else's parents taught them the same? I know I can't be alone here.
And should we be bailing these people out? I hear two tales as I scan the news every day. On the one hand, some say that without a bailout, people will make a run on banks and start a new recession. (Well what do you think we are in the middle of? A golden age? Hardly.) Some argue that if AIG is allowed to fail, banks all over America will fail and our economy will fail.
On the other hand, what is really at stake? The article above mentions specifically that we won't be able to "finance big-ticket purchases such as cars and homes." If this is all that is at stake, is it really such a big deal to let AIG fail? Who needs a new car? Must we all be able to buy a home at any time? What is really at stake is not the ability of a person to buy a home, it is a person's ability to finance a home. Is it unreasonable of me to think that we can live in a world without credit and without financing? Yes, I've lived off of student loans for the past 3 years... I'm not saying it's bad to live on credit. But is it worth paying $700 billion tax dollars to save a company from bankruptcy because that company made poor decisions?
Now that I see America's economy from the outside, it is evident that our economy runs on credit. That's why this is such a threatening situation. Too often, we don't have money... we have the promise of money. Even the US dollar, itself, is not real. Nor does it signify anything real like precious metal or any such collateral. If we bail this company out of trouble, what are we keeping secure? Our ability to take out more loans?
I'm not against the bailout, persay, I simply question it. And I am wholeheartedly against spending $700 billion tax dollars so that AIG's management can retire with full pensions, severance, and retirement packages. This isn't an issue of partisan politics, it's one of principles.
