I was pondering the US$700 billion bailout package for the U.S. financial institutions this morning and couldn’t help but think of Gravina Island. The fact that we aren’t giving any incentive for borrowers to change their habits by simply bailing out the companies who extended them unaffordable loans to begin with simply adds a lemming flavor to the whole deal. This bailout leads nowhere and the lemmings will learn nothing from the process. They’ll still wonder why following others up the escalator to nowhere ends up in a painful splat at the bottom.
As someone who has held off buying a house for a long time, instead saving carefully, paying off student debts and car loans, putting away money for a down payment on a house someday, I’m mighty chagrined at the news. It’s a complete disincentive for being responsible.
“Oh but people were tricked into taking these loans!” No. A small percentage of people were misled. Others knew exactly what they were doing and spouted lines like “You should totally buy a house, stretch as much as possible, you can make a great profit on it. It’s free money.” Yeah, that’s true for those who can afford the houses they took mortgages for. That’s called responsible investment. Others were just being greedy. Take some fucking responsibility for the money you borrow. If you can’t afford to pay back the loan, don’t take it in the first place. Now we’re using US$700 billion in tax dollars to pay off the loans borrowed in poor faith instead of using them for growth. That’s an awesome use of resources. Makes me so proud to be a taxpayer. I know, maybe next year I can pay for that Mercedes you couldn’t afford too.