What Do You Think Of The Bailout?
Posted by Peter James | Posted in Balanced Life, Current Events | Posted on 18-02-2009
Tagged Under : bailout, barack obama, economy, effect of the bailout, entrepreneur, how does the bailout effect me, stimulus, Success, wealth, will the stimulus work
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Every Wednesday is Personal Development in Business…
As a business owner, and an American, I’m a little torn about the whole Stimulus package about to be passed by our Government, and I’d like to hear your input. The concept of the Bailout is supposed to be to provide a cash infusion that will stimulate short term growth to get us out of the worst recession possibly ever.
For those that do not think this recession is anything new, I have this bit of news for you. In the late 70s, and even during the Great Depression, there was one major difference between those recessions and this one: our government had money.
That’s right, this is the first time I believe in history where not only is the country broke, but so is our government. They actually are going to just print billions in paper and call it money, something in style since the early 1970s.
Now I have heard about the spending on the war in Iraq, but how about the spending on Healthcare? Does anyone realize as a country, we spent over $2 trillion dollars on Healthcare last year alone? I mean, our Government burns through money faster than me on payday.
However, it is not Barack Obama’s fault we are in this situation, and he is doing his best, and what he thinks is right, to get us out of this rut. I just personally don’t think he has a chance with this bill. However, I am no expert.
History in other countries, specifically Japan in the 90s, has shown that Stimulus packages do not usually have the desired effect. Japan tried that road in the 90s and wasted a decade on it. The way they finally emerged from their recession was by cleaning out all the companies that should have gone under in the first place.
What do you think?
I do not believe in the stimulus package, but I only know what I read. I am curious what the collective opinion is on this major Historical event, and how it will be looked at in hindsight later on. So here are the two viewpoints…
The Yin
Barack Obama is a great man, dedicated to helping our country. In a crisis of this magnitude it is critical for the government to take control. The package that Congress has passed is going to stimulate the economy short term, create jobs, and help save money by investing in technological upgrades for the government and Healthcare. This will be the defining moment for Barack Obama’s presidency because of the triumph it is destined to be.
The Yang
Barack Obama has a good heart, but is way too inexperienced to handle this monumental task. This stimulus package is really a spending package that will not only fail to have the desired effect short term, it will actually have a negative impact long term. If the government wants to get involved, they should force the banks that gambled on Sub prime mortgages to go under and be bought up by the stronger banks that did not take that risk. The same should go for other struggling industries. Where one business fails, another will rise. The only way a market corrects itself is by being allowed to run its course.
Now it’s Your Turn
I am extremely interested in getting a collective take from everyone on this monumental event in history. All opinions are welcomed and encouraged. We could all learn something from everyone’s unique perspective.
There are two questions:
- What industry are you in?
- Are you leaning toward the Yin, toward the Yang, or somewhere in the middle, and why?
For more info on the possible effects of the recession check out this article.
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In any business there needs to be spending, there is no business on the planet nor any infrastructure where you can freeze spending and still think to earn money. It is 1000 percent impossible to do so. Take for example your average mom and pop store. If they put a total spending freeze on everything they would not be able to spend, to pay their distributors, payroll, taxes, and any other expense they may have in the way of them earning their profits.
The idea behind this bill, not only puts many long terms LONG needed programs into action, it also helps in the short term with the credit crunch and refinancing of homes that some of us need desperately. This stimulus package will fork out to the tune of 70 billion dollars to help people who are struggling to pay their mortgage refinance. It will help neighborhoods where more than half of it are forclosing.
Lets take another look at some of the programs that will make a difference, on one side of the fence we have the ideal that America should lead the way and lead by example. Turning 1000′s of govt building into more energy efficient sets the tone for things to come. That is another part of “re sodding” aspect of the bill many are adamant to go against.
Schools and education, well heres one I have to say I lived thru, up until the mid 90′s. Going to school in Brooklyn in 1 of the worst schools in brooklyn going thru metal dectors and scan wands every morning to make sure I am not the 1 of 5k students who may be carrying a fire arm I can literally say that the schools in the inner cities are falling to pieces. People who live and are educated in the suburbs do not understand this. They goto school with carpet, and central air, we went to school with lead paint and 65 kids in a class that should hold only 35, in the mid summer with NO a/c and no way to open the windows because they are nailed shut. Why? Becuase kids would toss books from the 5th story windows at moving cars.. To say we don’t need to put money into schools is obviously short sighted and a detriment to our future.
Energy efficiency, since we have stumbled now for 3 decades to even implement the idea that America can be the next Leader in Green Clean energy, I think its time we do so now. Our Energy programs keep us addicted to Middle east oil.
Last but not least, its been the conservative stance to yell hoop and holla about spending spending spending. May I remind the conservatives in a time of crisis something must get done. If someone is punching you in the face, surely you can opt to do nothing. Tell me how that fairs when your laying in a hospital bed…. Without doing something most of the programs in America will collapse. And no someoene won’t swoop in and correct the manner cause that someone would have their money tied up in a bank and last I check banks are NOT lending. That being said the addage of being conservative now to me is nothing more than a political principal thats way TOO late in the game to try to stand by.. Need I remind the conservatives that in the last 8 years we have spent a RECORD amount of money on a war we can not win.
SO I ask where were the conservatives and their red pencils calculators and spreadsheets then? Sleeping? or was it just convenient enough for said party to go along with the monstrous boat created by the last administration for profit and gain?
Ill let you guys decide.
@Christopher
So, I guess it’s safe to say you are leaning toward the Yin?
pretty much!
if there was a uber super far left. you would find me there sometimes.
I wish I knew better.
My natural instinct is that while well intentioned, the government tends to mess up. So the larger the project, the more room for error.
The stimulus package is beyond the scope of huge, so it seems fairly likely there might be some abuse of the funds. I like the idea Mr. Obama has for the complete transparency for these funds but even then it’s easy to say things are being spent on one thing while they’re being funneled to another.
I really wished the stimulus was handled in smaller chunks since that’s what seems it’s being broken into anyways. For example, our budget is the largest per capita ever for Defense, and yet even more money is included in the stimulus for Defense reasons. What is it that they’re spending all the money on then if they need more to keep afloat?
As for the banks, I can’t be certain that they are all to blame, but they certainly aren’t helping if they have grown “too big to fail”. I say break them up into small competing firms, like they did with AT&T. Force these smaller firms to fight for stimulus contracts by coming up with the best ideas for solving the housing issue.
I also want to know where these funds are coming from. It doesn’t seem like any other spending is being cut down, so are we just printing more money? I hear that causes terrible inflation. I’m for massive spending on USA interests, but not going over budget. But every year, we are always further in national debt and it never seems to come back and bite us. I just don’t understand why this works but it seems like it shouldn’t.
Like I said, maybe I just don’t get it.
@Robin
Yes, we are printing more money. Have no fear, though, cause I don’t understand the idea of, well, just print some more paper and we will call it cash. I love your At&T concept. I believe if a company is going to fail, action needs to be taken to let the market run its course, no matter what industry it is.
I believe @chris would be interested to know about the extra money for defense.
I mean, logically, it makes sense. Credit got us into debt. Debt got us into trouble. So what do we do? We get into more debt to try and get more credit. Hmmm. That seems like a strange course for correction, no?
@ Pete, debt did not get us into this mess. BAD decision making on what to do with our ALREADY surplussed money did. Remember that Bush took office with a 3 trillion dollar Surplus, and blew thru almost 7 trillion 8 years later. That’s an average of 1 trillion a year. A record amount of spending, from the people who preach spending is bad. That I do not get. If you say one thing you should do the same, not do something different.
As I said prior this is not a perfect system to really fix this country we would close down the fed erase taxes and put the dollar back on the gold standard. HOWEVER that is like asking for Santa and the Easter bunny to congregate at my dinner table and eat green eggs and ham. Its just a fairy tale which won’t come true any time soon.
You can however take the notion to let these industry colapse but what people do not understand is that letting these indutries completely colapse would have a detrimental effect on everything even our well being. (TOOO much money is invest by foreign countries that have our interest of survival and prosperity in mind, they would be very up in arms if we let things fail. Actually They were.. Read up why this country was put under marshall law for the first time since the civil war…)
Its alot bigger than most will believe, if our industries fail, it would take years for them to be regulated by the market this would cripple this countries complete way of life.
What i don’t understand is why the same politics on both sides is still being played, do people resent the bailout because they fundamentally think its wrong, or do are they just playing party politics across the board.
Credit did not get us into debt, a loose mindset of what the average consumer (set in motion by the way by the Great Ronald Reagan) super Capitalism, the idea of spend spend spend buy buy buy, with someone elses money is what got us here. NOT CREDIT. Credit if used correctly can make a nation grow, credit abused will make it collapse. THe fundamental problem is the average person in this country does not know what to do with their money, how to save, it how to grow it how to protect it. WIthout education giving someone more money in their pocket won’t fix the issue, it will simply put them in a bigger hole..
Credit is the new age drug of choice, Crack for a new millennium. If you give a crack head more crack you can’t expect that addict to go and toss it in the garbage. Give an addict more of its drug, chances are its only going to get high again. Same concept here without reform to what we teach our children and the idea of wracking your credit cards up to get things you don’t need nor can’t afford needs to be broken before we point ANY fingers at the govt and the intervention of this mess the US consumer has created for himself. If we need a person to blame. We only need to look in the mirror…..