Should we be for or against the government bailout of the banks?
We most understand what the problem is first. There were
loans given to people that could not afford to pay them back. Some lenders
wanted to keep the commissions and run with it. When some customers were not
able to pay back, the money the bank had to lend ran out. Many small businesses
in the United States work on credit and credit lines. The fact of the situation
is that there is no money to keep business operating which at the same time
generates a fall of the revenue and decline of openings in the market. The main
problem was created due to a vicious circle in which the economy got stocked.
You will hear comments blaming bad loans, price of fuel, interest variation on
so on. The truth is that we were not ready for what many economists knew was
going to happen. Our economy got in the circle due to the greed that exists in
the United States for which we did not have a plan or a law that could regulate
the lending market.
If I am an importer and pay for my product on delivery, a
letter of credit will help me generate the revenue to pay for my product as I
sell it. In other words, I could work without money and pay as I receive it
which generates jobs directly and indirectly. If the bank decides to pull or
stop his credit to my business, instead of me buying a full load, I may have to
lay off some of my employees to be able to pay and stay in business and still
buy only half of the product. Those employees that I had to let go will not
generate any revenue to local businesses which may fall in the same situation in
which I did due to the lack of revenue. Also, how about the producer, the
transportation company and the jobs generated indirectly by them? The whole
market starts to suffer.
Producers from other countries base their revenue on the
United States imports. If less product is required in the USA, they will
generate their own economic problem chain at their end. Well, guess what? The
United States also depends on exports to balance the economy. We are committed
to a global market and if we suffer, they suffer and vise versa. We most
generate a healthy market for other countries so they can push our market and
In a more personal level, there were mistakes made by the
lending institutions. If your budget can only accommodate a $2000.00 expense per
month and you decide to get a mortgage, you may only be able to get $150000.00.
The bank or lending institution should not lend you any more than that amount.
But, if the broker decides that the commission that he is getting is more
important than you keeping your property, he may just “help you” get the
amount that you need to buy that estate. Some mortgages could be approved
without the minimum requirements. He is only looking for himself and did not
even think that you may just have to give up your property in the future due to
your income limitation. How about if this happens to 1000 families in your
community? The problem escalates quickly.
As we can see the small mistakes made by some lenders generate a disaster that will affect most of the American households. The question is, should we be for or against the government bailout of the banks? If we go back to the root of the problem, we will see that it is there where the solution is going to be found. It is not about bailing out the banks, it is about pushing to fix the economic problem and stop the fall of the markets. We need to generate money. If a bailout costs $6500.00 per American Family, and we know that if the government decides to give you the money you will expend it without generating jobs and more revenue. What would you chose to do?
Back to Articles Corner
Useful links: citizenship Test, The constitutuion, US President, Bill of Rights Entrepreneurs