Tuesday, December 04, 2007

Want A World of Idiots? Taxpayer Bailout Will Work

A taxpayer bailout of distressed homeowners would be expensive, unfair to the vast majority of homeowners and renters who have made prudent financial decisions, and set a troubling precedent that would invite reckless behavior in the future. What's more, a bailout will not stop the inevitable correction in home prices, and is unlikely to prevent the associated economic repercussions.

It is self-evident that any bailout fund will be complex to administer, as well as arbitrary and unfair. While the plight of many who were caught up in the housing mania is tragic, a bailout package would almost certainly reward the least deserving. Those facing the greatest risk of foreclosure -- and presumably those who would get most of the taxpayer aid -- are those who bought a much more expensive house than they could afford, spent the equity of their once-affordable home, or lied about their income to qualify for a loan they otherwise would not have received.

Policies designed to suspend the laws of economics inevitably produce unintended consequences. Today's housing bust is itself the unintended consequence of an easy Federal Reserve monetary policy designed to cushion the economy from the fallout of the bursting of the tech bubble. Congress should reject a taxpayer bailout.

From today's WSJ editorial by Andy Laperriere

Bottom Line: If we make the world safe for idiots (and reckless borrowers) with taxpayer bailouts, we'll create a world full of idiots (and reckless borrowers).


At 12/04/2007 1:05 AM, Anonymous Anonymous said...

You can only get money from people who have money. The responsible adults who have worked, saved, and acted carefully are the ones who have money. They will pay for all this.

At 12/04/2007 11:13 AM, Anonymous Anonymous said...

It is self-evident that any bailout fund will be complex to administer, as well as arbitrary and unfair.

Since this is not a rational discussion I will ignore it.

See: http://mjperry.blogspot.com/2007/12/how-to-have-rational-dicussion-not.html

At 12/04/2007 11:42 AM, Blogger bob wright said...

I'm always amazed at how generous democrats are with other people's money.

At 12/04/2007 12:41 PM, Anonymous Anonymous said...

Wall St. is full of Democrats?

It won't be long before demands are made -- including from Wall Street -- for a taxpayer bailout of homeowners facing foreclosure.

Couldn't Mr. Bush veto any bail out?

What Mrs. Clinton says and what she would actually do are (like most politicians) two different things.

Anything that she says now about a tax payer bailout comes from not having the power to carry it out and probably wanting to put pressure on Mr. Bush and other Republicans.

At 12/04/2007 12:51 PM, Blogger bob wright said...

Yes, Wall Street is full of democrats.

Look at John Corzine.

Prior to his political career, Corzine was Chairman and CEO of Goldman Sachs.

Tangentially, a list I saw several years ago now showed that of the ten wealthiest U.S. senators, 8 of them were democrats.

At 12/04/2007 12:58 PM, Blogger bob wright said...

The super rich, like John Edwards and John Kerry, can afford to be cavalier spending my money through high taxes.

You could take one of Kerry's five houses through taxes and he'd still have four left.

35% taxes would leave Edwards with millions-and-millions.

35% taxes leave me with much less. I have only one house and much less income.

At 12/04/2007 1:03 PM, Anonymous Anonymous said...

So can not President Bush veto any bail out proposal?

At 12/04/2007 1:35 PM, Blogger bob wright said...

Apparently not.

The last 6 years are proof that just because there is an "R" next to your name does not mean you will be fiscally responsible or conservative.

I personally refer to most national politicians as republicrats.

The U.S. president should have a line item veto.

There should be no omnibus budget bills.

At the federal level when revenues increase by a $1.00, spending increases by $1.10 and the democrats blame tax cuts!

In Michigan, the 07/08 state budget increased in size by $900M from the 06/07 budget, and the state Democrat party called this a cut.


Apparently, the only way to control the spending is to control the revenues. Nothing else works.

Starve the beast.


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