Wednesday, September 24, 2008

Wall Street Bailout

I've been paying pretty close attention to this current financial crises. Of course, this makes me as knowledgeable and expert on the issue as I am about the cosmos, since I can see it from my house.

But, part of it is more simple than it seems. The "crisis" stems from mortgage backed securities. Supposedly many folks won't pay their mortgages, and the investors who bought clusters of these mortgages are worried about that failure to pay. The businesses who bought the mortgages, clumped them together (securities), and got other businesses to buy the securities are now freaked out that the mortgages won't get paid off, and that the businesses will still owe the payments to the purchasers. And of course the purchasers are worried that they won't get paid.

Anyway, bottom line, the fear is that folks won't pay their mortgages. So, why bail out Wall Street and buy the bad securities? Why not just insure the mortgages, i.e., why not just help out the home owners, and take away the fear that the mortgages won't get repaid.

Classic Republican trickle down economics. Help the rich guys because they'll then help out the poor guys. I guess that's finally been proven to be absolute stupidity. As someone else suggested today, if we're going to turn to socialism by nationalizing financial markets, why set it up to help the rich? Why not help the middle class and the poor. The rich have already done handsomely over the Bush years.

1 comment:

The New Arch Druid's take on the news said...

That is one argument that I find myself in agreement with. There was quite an in-depth discussion on this, CNN, I think about why this financial house of cards could collapse, seems there was a need to push these mortgages and securities in questionable new directions because of the rich commissions those selling them could get on them. A good description of greed run amok.