Should We Be For or Against the Government Bailout of the Banks?



Posted: Friday, November 28, 2008

by Luis Cardenas
http://www.theusgov.com

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 economy up. 

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?

Luis Cardenas Graduated at TAMIU with a BAAS in Sociology/Psychology after serving in the USMC. He decided to help people learn about the United States Government after writing a research paper for a political science class. He is currently the webmaster of www.theusgov.com and www.spr6.com
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Top-level comments on this article: (1 total)
» left by straight talk
 3 years 156 days ago.
112 fans. Follow straight talk on twitter!
Luis, let me ask you this without being rude -do they bailout people?
» left by Luis Cardenas 3 years 155 days ago.
6 fans.
The idea is to benefit American workers(an indirect bail out). It could have been irresponsible by some lending institutions to have done what they did and some government supervision may be required in the future but the problem has to be stopped as soon as possible. This is my personal opinion.
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