The Other Side Of The Coin
So what would happen if the government decided to just say “sorry guys, you’re through,” to the financial sector, and let natural selection take its course? It’s a question that people have been either asking, or completely ignoring as they grow more and more frustrated with this whole entire mess.
Really, what does it matter? It’s a bunch of idiots who should pay for their greedy and foolish mistakes, I’ve heard and read repeatedly. And I’ll be honest, I’ve wondered the same exact thing, and still do.
They say there’s always two sides to every story though, regardless of questions about validity. But if we want to hold ourselves up as intelligent citizens who look at the whole picture - and come on, it’s election time, so hopefully we’re all in that state of mind regardless - then we need to play devil’s advocate. We might still come to the same conclusions as before, but at least we can say we tried looking at the dilemma from more than one angle.
So here goes…
If we were to allow the big creditors to fail, this is what we’d more than likely see:
Of course people would lose jobs. At last count, Fannie Mae employed a total of 5700 people. Freddie Mac clocked in lower at around 5281. American International Group, Inc. has 116,000. Altogether, that’s 126,981 people out of jobs just like that. The U.S. jobless rate would go up just on those people alone, not to mention any other companies who panicked or legitimately had to let employees go as their creditors went down the tube.
And speaking of those companies who took loans out through these major financial firms, some of the little guys would suffer regardless of what people might like to think. Businesses who are just starting out, or up-and-coming establishments would have a much more difficult time actually getting a loan. And if they don’t have the financial backing to do anything with their ideas, then chalk up a few more thousand jobs out of the databases.
Want to buy that new home? Guess what…you might have to just continue renting for a while longer regardless of whether housing prices are currently going nowhere but down.
With more people out of jobs, that means less tax money goes to the government. And while we might not really care if our representatives take a pay-cut or not - what comes around with lousy policies goes around, right? - our everyday lives will be altered.
Probably not to any permanently damaging way, but those projects to repave the highway closest to your house? That’ll be put off until 2014. Deal with the roads the way they are in the meantime. Social Security would of course take a hit, more so than it already has, so don’t bet on that retirement you’ve been dreaming of once you reach the big 6-5. You’re probably going to have to work a bit longer than that.
Of course though, all of that might be worth it in the end.
http://www.smartprofitsreport.com/archives/2008/bear_stearns_buyout507.html
Tuesday, September 23, 2008 — by Jeannette Di Louie, Assistant Editor of Mt. Vernon Research
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