Should the Federal Government bail out the Banks?

Should the Federal Government bail out the Banks?

My initial Libertarian reaction is “Hell No.” But, as I said in my first post, things are rarely that simple. So, let’s explore this issue a little more in depth. I am also disappointed in the resolutions that both McCain and Obama have proposed.

I will first list the argument for:
The jump in the Stock Market the last the 2 days is proof that that the Federal Government has done the right thing. If we don’t bail out the Banks then the economy goes into a free fall and we go back to the Great Depression.

WOW! That sounds serious, and it is serious. So let me start at the top. I am a firm believer in Free Market, and Laissez-faire government. I believe that the market, left alone, will take care of itself. To bail out these greedy Banks that offered people Million dollar mortgages for $1500/month is wrong. It removes any accountability, and prevents more responsible banks from purchasing the non-defaulted loans cheaply and rebuilding. Bail outs are just a Band Aid on a Bullet hole, and hurt us all in the long run. Not to mention we will ALL have to pay for the mistakes of some greedy executives.

Libertarian Presidential Candidate Bob Barr says “Capitalism involves losses as well as profits," Barr explains. "When government tries to insulate businesses and investors from paying for their mistakes, we all lose.  In a Barr administration, there would be no more corporate bailouts or takeovers."

What about all of the lost Jobs?
The U.S. Unemployment rate has been less than 6% since 1995. Only Japan has had lower unemployment.  This would be manageable, and good employees will find jobs for better and more market stable companies.

What about the stock market?
As it stands now, Investors distrust the mortgage companies. After a bail out, do they trust them more? Any rise or fall in the stock market temporary. Imagine if the banks had to use best practices or they would go out of business? Don’t you think they would have better judgment?

Why is it just the big Companies that get bailed out?
We never hear about smaller companies getting “help” from the Feds? Why do the big Companies deserve it more?

What about regulation?
Regulation is another way of removing accountability. Who decides what is best for all of us? If a Bank wants to take a risk, they should be allowed. This is supposed to be a free market. If that risk does not work out, they must accept the consequences.

Please leave comments. I would love to hear from anyone.

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About Yell

I'm just a regular guy that considers himself a student of politics, economics, and the general state of our Country. I love to engage in conversations with others that may see things a little differently. I also believe that there is never a reason to be impolite, so while you may yell at me, I will never yell at you.

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