Talking Bailouts

I don’t usually talk about economics on my site – as I have said before. However, there are certain events that force even me to discuss them. If you follow stocks, then you probably saw that the NYSE took another major hit today – dropping more than 300 points. While this one drop poses no real threat to the health of the economy, the roller coaster ride that has been happening the last couple of weeks, could. I don’t pretend to be an expert on economics – which is part of the reason that I don’t usually talk about them. However, the reason for all of this economic shaking is fairly easy to understand. A couple years ago, there was some unwise borrowing by home-owners and some unwise lending on behalf of certain mortage companies. There is plenty of blame to go around, so I won’t spend time on that. All I will say is that those past decisions are now biting both groups the butt.

The reason that I am bringing this all up is that it could have political consequences. The federal government – or, rather, certain people in it, are now talking about a bailout, either for the lending agencies or the homeowners who can no longer afford the payments they are expected to make. Capitalism would seem to dictate that you let people fix their own problems, or suffer the consequences of poor planning. However, the last thing anyone needs are thousands of new homeless people, and a sudden wave of bankruptcies by lending companies.

As might be expected, the Democrats seem more open to the idea than Republicans, but I think people in both parties may be persuaded. Firstly, we are in an election season (though that seems to be a constant thing now), and both parties are “in power” – and neither want to be on the receiving end of votes from angry voters. Congress might be tempted to support a bailout in the name of saving the economy, and the President might be convinced by those in his party who don’t want to see the Bush boom turn into the Bush recession – that would undoubtedly be more publicized than the positive economic growth seen under the current administration.

I can’t say for sure weather or not a bailout will actually happen, though, if the current trouble continues, I think there is a very real chance of some kind of federal action.

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