In watching various interviews regarding the US Government Bailouts of the Financial Industry and the one being discussed for the Auto Industry, I have some thoughts.
One assumption that seems to be at the center of all of these bailouts is that these companies are too large to fail. I don’t agree. When a person goes into bankruptcy, they come out of it on the other end with a different perspective on money. It seems that many of the companies management teams don’t treat the money as if it was their own and so have been loose with risk. They need a perspective change. This includes executive management compensation.
Does that mean we shouldn’t do something about the situation? No, there are possibilities.
Loans are not bailouts and could go to companies that change practices. Some changes could include elimination of predatory lending and increase focus (greater than 50%) on greener transportation options. I’m sure there are other business practices that should change to but given my limited understanding of these businesses, these seem like a good start.
Also, what about buying troubled mortgages from the financial industry and then negotiating new terms for the mortgages so that people can stay in their homes. These troubled mortgages would then be healthy and can be resold back to the financial industry (yes, some cost would be involved).
We should be more cautious with the numbers that are being bandied about. A trillion dollars is a lot and we should treat it that way. It’s too much debt for our government and ourselves, children, grandchildren and so on. Our government and elected officials need a perspective change too.