Who should we bail out?

I know it’s not huge in the news anymore, but something has been bothering me about government plans to bail out Fannie Mae and Freddie Mac (home mortgaging giants) ever since I first heard that it was being considered. I just couldn’t quite put my finger on it, though, until my friend Danny came for a visit and we started talking about government. He nailed it out of the ballpark.

Why are we bailing out the big billion-dollar banks, who are a victim of some pretty shady mortgage practices (enacted by themselves) and leaving the home owners hanging out to dry die, when we could be helping out the people who are on the verge of losing their homes? Fannie and Freddie would still get helped out. They would ultimately receive the bail out money. The difference would be that a lot of strapped-for-cash families would get to keep their homes in the process. Something which is completely lacking from the government plan. And those families who would go from financial ruin to doing-all-right would suddenly find themselves with some extra spending cash in the budget. Cash which they could then spend, boosting our economy and creating jobs. Instead the money goes directly into the pockets of the rich people who will not actually redistribute the wealth very much, because they’ve just been bit hard, and are much less willing to throw cash around than they were a few years ago.

But while bailing out big banking is “essential to the economy”, helping out people who are losing their homes is, I guess, socialism. Even though all the money winds up in the same pockets either way… It’s just not politically expedient to help out individuals (and businesses) the way it is to help businesses out. Even if bailing out the people and the businesses costs just as much as bailing out the businesses alone.

I also found an interesting piece detailing Alan Greenspan’s disapproval of the bailout. He’s not exactly a dunce about the economy.

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