This battle is filled with arcane terminology, numerous moving parts and seemingly no clear “right” answer.
I’m speaking of course, about bailouts being proposed for homeowners and financial institutions. But before we talk about bailouts, we should ask ourselves these questions:
- Should we keep homeowners, who are stretched beyond their means, in houses they can’t afford?
- Should we let borrowers lose their homes and see what happens in the marketplace?
- Should we treat subprime borrowers differently than prime?
- Should we allow large financial firms to fail?
- Are we damaging capitalism, and thereby the economy by bailing out either group?
- Will our children shoulder a bigger tax and inflationary burden if we bail everyone out?
- Or will the situation be worse if we don’t?