Originally Answered: Why do all "Bail out plans" Not include a Bailout to the People?
how would you make it possible for these people to pay it down? give them free money to pay their loans with? the people need to be foreclosed on and the banks need the go bankrupt. the fact is they never should have been given the loans in the first place. poor credit, many times zero income. in most cases its the goverments fault at every level. from federal right down to the city and county. federal even forced wall st to back the loans. so in a way it is their responsibility to bail them out. but its unecessary. the free market can correct it. for example:
gas prices and oil trading high. oil prices arent set by the oil companies. just the TALKS of offshore drilling caused the speculators buying futures to buy lower. originally, the drilling limit was 200 miles offshore. the second we started talking about drilling the price dropped because the speculators figured more oil would be available in the future. now we passed the new offshore drilling bill that bring in the limit to 50 miles. the important thing to know that no one tells you is that 85-90% of the offshore oil is between 3-50 miles. so we actually acomplished nothing as far as getting more oil, but we forced the speculators to buy the futures lower which for now has lowered the gas price. they did it with no govt regulation or intervention. think about it. we havent even started drilling yet.
apply the opposite to lets say our air travel system. we bailed them out once because of 9/11, now they have no accountability. they treat customers worse, lowering sales and their revenues, and in turn treat people worse because of that. $2 for water, $25-100 for a standard luggage bag,$3 for peanuts, etc, causing even less people to travel and even lower revenues. no big deal, theyll just get bailed out again. now if they had been allowed to die, it wouldnt be anything like the govt said it would be. their reason for the airline bailouts is that it would leavev the country with no transportation. if they would have just let those particular airlines die, there would have been some others left, and soon after some enterprising person would buy those assets being liquidated in their bankrupcy and assume their operations as a new company being run properly. - customer satisfaction. understand, in the rest of the world the airline industry is booming.
so apply that same free market principle to this situation. a major part of the problem now is that banks see this as the perfect time to declare bankrupcy because of the bailout, causing more to go under and more. see were not actually bailing out the banks were bailing out their insurance company AIG. when banks go under their assets or their entire entity is sold off. take this thursday night while you were asleep washington mutual died. before morning, fdic has already lined up a buy, and by open of business friday morning it was business as usual under a differnt name not affecting how the customers get their money. thats the entire entity being sold. in other cases more serious, the debt are bought by other banks or debt collectors and the customer continues (or contines not) to pay their bills to them.
now, i do say it should be illegal for these multimillion dollar severance packages. CEO gets 9million severance thats 9mi that could have gone to their debt, meaning 9mi less us tax payers would have had to pay.
dont be fooled into the hype that the economy will collapse. thats all based on the stock market crash that happened because of it which, just like with oil, bouced back to where it was suppossed to be just by TALKS of what were gonna do. now that we stopped the quick crash, what needs to happen is slow death. little by little, and let other entrepenuers buy their assets and run them with a better business plan.