JPF Home Page Forums Stop The Bailout

The whole matter is something that my wife and I have been anticipating for a long time, watching home prices soar without justification, while lending institutions made ridiculous loans designed to fail. The problem for the lending institutions was that they were not prepared for the correction that came. They assumed that their losses would be hidden and correctable after the eventual fall that was inevitable. Little did they know the fall would be so great, making the shortfalls massive and unconcealable. I know the economy is messy, but I believe that the market will stablize itself, and financial institutions will resume business as usual whether the giant institutions fail without bailout, or not. The timing of the turnaround is difficult to predict, but I think Mike's numbers are reasonable. It could take 10 years. I actually believe a fresh start allowing new lending entities to enter the market would do more for the country than trying to prop up the current infrastructure. Afterall, it will be the same handful of players who will eventually finance new entities, and the first thing they want is the government to pay for it so it does not come out of their pockets.

This, of course, would take time, and some help from the government to allow this to emerge, hopefully without dumping large amounts of cash to be infused (I know, that's a pipedream!) The government should clamp down on predatory lending practices, but propping up the existing infrastructure will not do that. The changes that will go along with a bailout will not affect this because the monster institutions will convince the decision-makers that now is not the time to clamp down, so the controls that will get put in place will be mostly superficial. Therefore a real strong oversight reform will never happen.

Remember, the big players in all of this are diversified in other industries and other countries. They will not go down personally, but will let all those smaller investors pay for the collapse.