Writing about Healthcare now is akin to reporting about the NBA during the fall, and I'm not JA Adande. Part 2 of my universal healthcare will have to wait.
As you know the bailout failed to get the votes needed to pass congress on Monday. My opinion about the bailout has not changed and I am pleased it didn't pass in it's current form.
As pointed out in a previous post I believe it was irresponsibility that led us to this point. The blame is being placed on a select few because it's easy to point the finger at the rich greedy investment banks, but they are just a scapegoat for western society as a whole. We live in a giant debt bubble. Debt got us here and I'm just not too happy that the best solution to the problem is for the government to conjure $700 billion in credit to purchase beaten down securities. I have never traded on margin and I don't plan to (I don't feel comfortable with the thought of buying securities with borrowed money, more on that in a future post), yet this is exactly what the President, and half of congress wants us to do.
Unlike many out there I believe stocks are overvalued. The correction following the internet bubble lasted just long enough for us to enter the real estate bubble. A lot of people lost their shirts when so many useless internet companies went under because they made poor financial decisions.
The next little while is going to be difficult for many without a bailout, but for the sake of the future it just can't happen. The institutions that granted so many poor loans will not change for the betterment of society should they receive a bailout. The mortgage holders will not learn from their mistakes if it turns out that the mistakes actually benefited them.
There are good banks out there and they won't be receiving any government aid. The failure of a few giant firms will have drastic consequences but the void will be filled with better alternatives.
In the end I fear the bill will pass and when President Obama takes office he will raise taxes for those in the higher tax brackets to pay for the purchase. Ironically this will not have much affect on many of those who are defaulting on their mortgages because they either don't earn enough to be affected by a tax on the wealthy or they make their money flipping houses meaning most of their income is taxed as capital gains leaving them under the highest tax brackets.
At least the accountants of the world can rejoice in their increased job security.
As always I welcome your comments should you agree or disagree with me on this topic.
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2 comments:
Yup, it's all about job security for us accountants. Ever since the Arthur Andersen debacle, we've been looking for some way to prove again that we're indespensible. I think we've found it now. Yippee!
I do like this blog. I don't always agree with you of course, but what's new about that?
I absolutely agree on the who's-to-blame issue. I'm sick of hearing people blame the greedy lenders for all these problems, although they certainly played their part. But I know of tons of families who were greedy in their own right, wanting houses that were bigger than their incomes. When we sold our house in North Carolina, we found out that the couple who bought it had TERRIBLE credit--and low-paying jobs--but convinced a lender to get them a mortgage for--yes, truly--12% interest. Big surprise, it forclosed 6 months later.
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