Dean Baker Financial Meltdown: "But the cover stories don't hold water. We can keep the banks running without bailing out the incredibly rich people who drove them to ruin. England showed us the way earlier this year with its takeover of Northern Rock, a major bank that got itself in trouble with bad mortgage debt.
We can also help homeowners without bailing out the banks. The rescue proposals currently on the table would have the government buy or guarantee mortgages on homes that are still hugely overpriced. These proposals could give hundreds of billions of dollars to the banks, while providing little help to homeowners. Most would still be paying far more on their mortgage, property taxes and insurance than they would to rent a comparable home. Furthermore, the bailout conditions virtually guarantee they will never have a dime in equity."
During the Great Depression, a massive bailout of savings&loans was made. It didn't help. Some are adamant this action actually caused the depression. This was less than 100 years ago, how can we be about to make the same mistake? I get my thoughts on this from vague history class memories, below is a link to someone with a tad richer credentials:
Lessons from Bailout History
Joseph R Mason
Associate Professor of Finance and LeBow Research Fellow, Drexel University
LeBow College of Business, Senior Fellow at the Wharton School, and Financial
Industry Consultant, Criterion Economics, LLC. Contact information:
joseph.r.mason@gmail.com
332 Landslide
March 24, 2008
Financial Meltdown Doesn't Hold Water
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