Hello again. First off - Beaux, great post.
I was sitting with my work team this afternoon, watching the news about the markets falling enormously for another time today. The economy is clearly in shambles - a crisis widely accepted to be unlike any since the crash of 1929. As we near the election of a new President, much focus falls upon the proposals of these two candidates to reverse the global economic calamity we face today. I got to doing some more musing, and here's what I came up with...
The root of the problem we're facing right now is sub-prime mortgages, and with that, bad credit. Essentially, Americans who could not afford to pay back their loans took out large "sub-prime mortgages," which enabled them to spend well beyond their means, particularly taking out loans to purchase real estate. The $700 billion now allocated to buy up these bad mortgages - essentially giving a free pass to those who took them out - will serve to remove the financial burden off of these Americans. My concern comes with this "bailout" plan which, as I mentioned above, rewards - with a free pass - many Americans who, cutting through much of the bullshit, made irresponsible financial decisions. Conversely, the bailout plan does not reward, and, paired with Obama's tax plan, could actually penalize, other Americans who have been financially conservative and responsible, and who are equally financially strapped because of the world's current economic turmoil.
It can be argued that, well, it's human nature to want to get the most one can and take the most from an opportunity... therefore, when someone making $30k per year takes out a mortgage on a $1 million house, human nature must be the culprit, the motivation. Along with this line of thought, it would therefore be the fault of the banks, who enticed Americans to take out these ridiculous mortgages. And it's true... much of the fault does fall on the offending banks.
But my problem really comes down to personal accountability, which seems to have gone out the window. As a new player in the "real world," I of course need to be prudent with my spending, balancing my costs with my income, and keeping close track of my accounts. While I would like to eat out every night, buy new suits (stud), and drive a BMW, I know - the numbers show me - that I cannot necessarily afford to. Now, with careful allocation and investment of my income, I know that I'll eventually be able to afford these things. Even at 22, I am making financially responsible decisions with the small amount of money I have.
At its most basic level, it is not difficult to identify and stick to one's financial bounds - regardless of what tax bracket someone belongs to - and while some people may be more strapped financially than others, that should not be an excuse to act irresponsibly financially. Rather than ignorance as an excuse, taking out enormous mortgages - and knowing you cannot pay them back - is greed. As I wrote earlier today, 1 in 6 Americans owe more money than the value of their house. That is baffling and unacceptable. Is this fair to the many people in this country - across any and all tax brackets - who have worked damn hard and planned carefully to build a stable and responsible financial base? While there are certainly criminals on Wall Street who have taken complete advantage of investors to fill their own pockets, acting irresponsibly, unethically and greedily, there are many, many hard-working people in this country who don't deserve to be ripped off by the financially irresponsible and greedy in this country.
I have a problem with the "bailout" plan in place and with Obama's plan to tax the top 5% - those who earn $250,000 or above - "because they can afford it." A blanket tax schema of this sort does not make sense to me. While "taking from the rich and giving to the poor" might have worked well for Robin Hood in the oppressive aristocracy of Britain, the same type of policy will not work in the U.S. today. There is a sense of entitlement in this country; the mind-set of working hard to earn one's living, a former staple of the American way, has fallen off course. Those members of American society who have worked hard and acted ethically and responsibly and have earned their $250,000+ (or whatever amount they earn) should not be forced to make up the burden left by some members of this country who feel entitled to what America offers, and who have let greed - not reason, responsibility, or need - shape their irresponsible financial decisions.
Mis Hermanos y Yo
17 years ago
5 comments:
Who should pay? Those that do not have? I am not saying that I have any answers and you have more financial knowledge in your left testicle than I will ever have. However, it makes sense that those who can pay should and those who can't...well they can't. I agree with the free market and capitalism (whatever all of it is) but didn't are we not in a time where the "haves" so step up to the plate?
* "haves" should step up to the plate?
1.
The government did the right thing by recently buying equity stock of banks this week--effectively turning them into the equivalent of the much sought after treasury bonds. Though the bailout plan has its misgivings, to do nothing would have been, will be, worse. It is obvious the market will not always correct itself (sorry Milton Friedman) and some intervention is necessary.
Because of the size of the bailout, using monetary policy, which undoubtedly would crush the economy due to inflation, was not a viable option. Unfortunately, that means tax payers must pay for the bailout, even those who were fiscally responsible.
2. You've mixed up the root and the product of the problem. Sub-prime mortgages and frozen credit are the fruit of the problem. The actual root of this current mess, as you said, is the deterioration of fiscal responsibility and accountability on part of not only individuals, but also of financial institutions and the government. I wholeheartedly agree that living within (or, in many cases, under) your means and, perhaps more important, saving is a core value to which this nation must return or accept the consequences. China has done it, so too can the United States.
Man, Marcos was totally a biology major. I wish I knew more than my gut feelings about these issues. But, I'm pretty inexperienced when discussing such issues. I will do my best, but do not judge, and bare with me.
Marcos is your friend. He only means the best for Xtreme, JPSous, and Tacitus.
Now, I don't really know what to think about the 'bailout' plan. I do think that it would be best to do something to catalyze the recovery of the economy. And, if that means boosting taxes a little bit more, than so be it. Everyone hates to have their taxes raised, because everyone has that much less cash. That pisses people off. But, that's just because people are always quick to put themselves first. I think it's about time for people to stop bitching about themselves and start thinking about what's best for the current condition of this country and for its future.
Albeit shaky, generalized, and from the gut, Marcos has spoken.
I’ve been asked to consider many “enlightening” conservative economic anecdotes, but the one in the bar is my favorite…
10 guys go into a bar for a round of tall daddies. At the end of the night, there is a $100 tab. The bartender distributes the owed amounts to the different gentlemen to the effect where three are not required to pay, two pay a small amount, yada yada, and the tenth is finally given a tab of $40 – 40% of the entire tab. This analogy is supposed to be representative of the democratic "tax and spend" system. There's just one problem with this comparison – the top 1% and those along the poverty line are not drinking the same amount of beer. When you're making $250K+, the government does MORE for you, i.e. protection via fire depts, police depts, etc. Therefore, since the top percentile’s interests are more substantial, shouldn’t they be required to pay more? I think so.
Additionally, the Democratic notion of taxing the top 1% is not as simplistic as taxing the successful to "redistribute wealth." Rather, it's an altruistic formula, where a “rising tide raises all ships.” (If you don’t believe me, just ask your parents how well they did under Clinton’s tenure)Since I'm no more than a closed-minded Southerner, I'll give you an example Beaux and I can easily relate to -- I have no problem with the fact that my taxes go to the funding of the public schools in the area of Ruston, La., as I would eventually like to return there. By donating pieces of salary, the top percentile can benefit from a surrounding educational system, workforce and society in general who benefits from the allocations. With educated people an economy can prosper. With uneducated people an economy and society will inevitably stagnate.
Obama’s theory of taxation is a reciprocating system which benefits all. If we as a supposed democratic, welfare nation took the cavalier approach of every man for himself, we would inevitably wallow in our self-created demise. Call me a whacky, slippery-slope of a blogger, but revolutions happen, largely due to greed of few coupled with neglect of many.
Undoubtedly, we as a nation should encourage self-responsibility. But we should also have a system that is forgiving, to an extent, and helpful to the less fortunate. Not that I’ve amounted to anything yet, but if I ever do, I’ll be the first to tell you whatever success I have is largely (if not entirely) due to the chances I was given, not earned, but given. There are a whole hell of a lot of people who haven’t been given a lick, and I believe it’s the government’s responsibility to provide at least the most basic sense of welfare for everyone. Kids born into poverty did nothing wrong in utero to “deserve” to be cursed for a lifetime. It’s damn near impossible to pull yourself up when your boots don’t have straps, or you don’t have boots at all.
A really wise woman once told me, “there’s a difference between hitting a triple and being born on third base.” Think about that.
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