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Originally Posted by Army_of_One  I am just saying that we shouldn't bail them out with tax payer dollars. |
That's why it's so easy to polarize in today's environment. You see a taxpayer bailout of people loosing their home and assume everyone over reached therefore should reap what they sow. And there is some truth in that. But the global picture has severe consequences for most of us, even if we're not "house rich and money poor".
This isn't about saving people's homes who should not have bought them. That's just a consequence of the proposed solutions. If it was then this thing would get some press, a few bonehead headlines from congress introducing bonehead legislation and in a few weeks the news moves on while nothing really happens.
What the problem really is the valuation rules placed in effect post Enron and Worldcom that changes the way businesses have to report the value of their investments. Because the way these mortgage products were packaged and now that the bottom is falling out, their capital position is tenuous and that's what creates the uncertainty in the markets and shuts the flow of capital to the small business owner. If the way to prop those investments back up is to get some high interest ARM's reworked, then so be it. The investors still loose because they aren't the getting the same returns they intended and the mortgagee's still have to pay but the rest of us don't suffer as much.
And since there is no universal rainy day coffee can fund that Americans can contribute to in times of emergency, it falls on the government to stabilize things where possible and that funding has to come from somewhere.