Thursday, January 29, 2009
Economy -- bail out?
As I see it our government is bailing out the wrong end of the population. If we had money to spend then companies would hire more people and make more jobs to sell more stuff to make more profit. Yet the government seems to think you have to give money to the companies and create the jobs first. Isn't that the reverse concept of supply and demand? If I don't have the money or desire to buy your product then i won't buy it no matter how many people you hire and how many widgets you make. Where did that get us? It got us in debt up to our eyeballs. Credit was extended so that people could continue to buy more stuff and in turn kept people employed. But these people could not afford to pay back what they purchased. If all we want is more stuff why not do away with money all together and as long as you can prove you are being a productive citizen you get free stuff. So here we are with the government bailing out the largest companies in the world with billions of dollars to cover bad assets. Sounds to me like all we are doing is helping to prop up where we were before. These large companies will use the money to pay off these assets. Now the company looks better on the books. However many Americans still will not have jobs? If they want to buy something they will have to get a loan. Sound familiar? Now the cycle starts all over again. If this is really the way it works then I feel sorry for our children and grandchildren.
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3 comments:
I hear ya! You been watching Jon Stewart regularly? I swear I heard him propose the same thing just a few days ago. You're right, if the little guy doesn't have the money to buy stuff, it makes no sense to give money to the company just so they can make more stuff that won't get bought.
First let me say, I am not for this bailout. Your points are my main problem with this whole set up. We are propping up companies that through bad business models and government meddling have led to their demise. Yes this hurts. But to bailout these types of companies will only further this perpetual cycle. Now with that said, do you bailout the little guy? And what would be the purpose in giving money out randomly to individuals, just for the purpose of spending? i.e "spreading the wealth". The better solution to this problem would be to limit taxes levied on all parties. This system would cover all of the points you make. One, the individual would get the benefit of having the "extra money in his pocket" that would allow him to purchase items he wants/needs. Two the company would be able to allocate funds to insure their ability to function in the market place. For example, creating a job for you and I... The government has proved that they are the bureaucracy that has started this problem, why on earth do we think they can fix it? Just because we changed the driver, does this mean the car is any better?
What we need is a bail out for all people that gives us less greed. I think giving money to people, little guy or big guy, really makes no sense. All it does is extend the problem. I don't know if limiting taxes would help much either. For the majority, limiting taxes would only help in a small way. Say I get a tax cut and my take home pay jumps up $20/month. With all the tax payers making more money that means the large companies are making the largest benefit. Ok, some would say 'great' more jobs. But the problem is I still have only 20 bucks in my pocket. This goes nowhere when I want to buy a car or a home. Maybe I could take my wife to chain restaurant and only one of us pays for the meal. The larger problem is goods cost more than the average household can afford. Tax cuts, unless extremely large, mean more of the same as well. Just a little more $ to go to the dollar menu. :)
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