Wednesday, February 25, 2009

Who Do We Bail Out?

In the wake of a massive bailout bill the question remains who should the government bail out? Should it bailout individuals or should it bailout corporate America? There are always at least two sides to every argument. In this case the Democrats are focusing on the individual. The Republicans desire a stabilization of certain corporations especially financial corporations.

There are two things that must be addressed before answering the question. First both individuals and corporations acted in poor faith. Both tried to get over on the other. Individuals got in over their heads in debt by the desire to keep up with the next door neighbors. The corporations capitalized on the greed of the individual by acting greedy themselves. Both are at fault on led to the economic disaster we are facing right now. This leads to the other issue that must be acknowledged and that is that America is on the brink of another depression. All the spending proposed by Obama and the Democrats has tripled the debt left by Bush in a matter of less than 40 days. The risk is that the continuous borrowing of America will lead to the same failure as our economy as a whole. The disastrous economy we now have is the direct result of individuals borrowing more money than they could afford. Personal finances are causing individuals to crumple under their own debt. This failure to repay debt has taken the consumer aspect of the economy out to pasture. People can't afford their bills and therefore can not purchase goods and services. In return companies are unable to sell their goods and services and fall into bankruptcy. It is a vicious cycle. So back to who our government should bail out.

Our government has spoken of bailing out the individuals. The faithless borrowers that should never have been in the over priced homes they purchased will receive $275 billion dollars to keep them afloat and in their homes. This will probably allow the housing market to stabilize and find its bottom. However it does little to fix a failed economy. Right now the credit market is frozen. Corporations are not purchasing capital. Capital is what will get the economy moving as a whole. Keeping people in the homes will not do much in the form of repairing the economy. Helping the individuals will not create jobs. In fact while while we provide money to individuals we take away from the greater economy. We might stabilize housing which in return would stabilize the financial market but it will not create one job in America. Companies will continue to layoff individuals causing even more individuals requiring a bailout. So even more homes will go into foreclosure.

So in the end there is only one way to bail out the economy. We must bail out the corporations and financial institutions. Keeping our nations banks afloat will open the credit market. Companies and corporations will quit laying individuals off and the economy will find its bottom. We will keep more individuals in their homes by stemming the flow layoffs and getting to the bottom of the unemployment than bailing out the individual. The individual will then spend more in the economy and we can begn to expand. The focus needs to create private sector jobs. Jobs that make a profit for the individual and the companies. The Gimmicks offered by Obama to create Public sector jobs only creates a reliance on government jobs. As the revenues taken in by the government shrink so will the budget for public jobs. Obama's plan will only deepen the recession and cause a full blown recession unless the focus is on the institutions, companies, and corporations that create jobs and employ the populous.

On the surface it appears the democrats are noble fighting for the individual. However in the end their policies will hurt everyone. Sometimes it is more noble to sacrifice an individual to save the whole. It is similar to having a bowl of apples. One of the apples is rotten. Do we try to save the individual apple or look out for the greater good and toss the bad apple away so the rest will not spoil. The answer is clear and simple we must get rid of the rotten apple so that we might enjoy the rest of the fruit. The same is should be the focus of the stimulus of the economy. Focus on the whole populous and and not the individual. Save the jobs and we save the economy.

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