The Parse

Parsing the stupidity

Posts Tagged ‘bailouts

Shirking responsibility

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From the NYT:

During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. …

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up. …

…the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.

Ah, yes, it’s the increasingly American way: I’m a victim so I’m not responsible.  Although “the federal government” bailed out the banks, all of us are on the hook for it in terms of higher taxes and greater national debt down the road.

This is part of the reason I was and am still opposed to the panicked bailouts of 2008.  They essentially rewarded irresponsibility by lenders, borrowers and the government (i.e., Fannie and Freddie).  And now human nature makes its natural response: If my poor decisions are going to be covered by the rest of society, I’ll just keep shirking responsibility.   How does the administration respond?  More handouts.  All of this because somewhere along the way, it was decided that increasing home ownership was a governmental responsibility.

Written by The Parse

August 13, 2010 at 9:17 am

Preparing for The Ultimate Bailout

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About ten years from now, Congressional leaders and the president will appear before hastily gathered gaggles of reporters and declare that if something isn’t done immediately, the next month’s Social Security checks will not go out and Medicare payments will not be made.  And much like they have done this year, our genius leaders will draw up emergency spending legislation to the tune of trillions of dollars to prevent the impending collapse of the two entitlement programs that are on the road to a major shortfall.  If you thought $700 billion was a lot of money, wait until you get a load of the unfunded entitlements price tag.  It will be The Ultimate Bailout.

For years, studies have sounded the alarm that the day is approaching when, due to a number of factors – including Baby Boomer retirements – there will be no money for these programs.  And for years, politicians have refused to do anything to address the problem (unless you count killing George Bush’s partial privatization proposal as doing something).

But don’t worry.  Washington has gained crucial experience this year in the art of dithering to the point of ‘crisis’ and crafting massive bailout bills under the cover of night to make everything all better.  Their training will come in handy down the road.

Written by The Parse

December 9, 2008 at 9:55 pm