Neighbor Wealth

This is a pretty hot topic area. I am not going to slide into politics or play conservative or liberal, but here is my take on our existing situation.

I believe that the market place can and will take care of itself. I believe a major constriction occurs when the government steps in and imposes too many regulations or ‘bails out’ any business. If a company fails it is because something is wrong. The company was mismanaged, no longer relevant or acted on principles that are not condusive to the market environment.

Since our mortgage industry is at the forefront of this whole thing let’s talk about that for a moment. The companies that were about to fail and were rescued by our government were failing for a reason! We are talking about the mortgage industry! These companies had billions of dollars pouring into them in the form of mortgage payments. When the consumer had an adjustable mortgage and the interest rate increased beyond their ability to pay the mortgage industry foreclosed.

Lenders could have responded differently. First of all, they could have decided to work with the home owner to adjust the interest rate to a more reasonable rate. They could have had the consumer apply for the loan again and give them an interest rate that was within their ability to pay regardless of their credit score. This would have obviously benefitted the home owner and the lender. The homeowner would be allowed to keep their house and the lender would still have a flow of money coming in.

Instead the mortgage industry decided to foreclose and basically strangle themselves. That is fine. That is their choice. They should then suffer the consequences! If they lose their flow of income because of poor business practices then they should fold. The market will take care of itself. Any assetts that are of any value will be purchased by reputable companies.

There is no way we can possibly tell what the state of the economy would be right now had the government decided to remain clear of the financial sector. We have spent billions of dollars trying to rescue the lending industry.

Couldn’t that money have been used for programs to assist people who lost their home or their job?

The government could have set up a program to lend the homeowner money so that they could save their house. The government could have also set up programs to assist people who lost their jobs in developing new skills. The money could have gone to unemployment insurance. That money should be used to help people who are experiencing difficulties because of the situation. Our government should not be a welfare program for poorly ran companies!