Maybe the Bailout Isn't So Bad...

I've noticed that there are a lot of misconceptions about the Wall Street Bailout bill that's making it's way through congress, and I'd like to put a few of them to rest. I'm not suggesting that the bill is a good thing, mind you. I'm no economist, and frankly I don't think I'm the best person to make that call. I just think it's a good idea that people get their facts straight before they jerk their knees and make angry calls to congress.

It's Not a Handout

Congress isn't giving money to these ailing companies. Rather, it's buying all the investments no one else will touch. This means the government should make some of its money back. The investments are unsellable junk because they're expected to lose money, not because they're totally worthless.

So yeah, the government will probably be taking a loss on the purchase, but the question is: how much of a loss? That's impossible to tell. Hell, it's even possible they could make some money of the deal. One thing's for sure, though: the government will not be losing all 700 billion dollars it's pumping into the banks.

It's Not About Mortgages

Not directly, anyway. Sure, investing in a bunch of worthless loans is what got us into this mess, but the fact that a bunch of folks may be facing foreclosure is not the problem. The problem is, because so much money is sunk into these poor investments (which could've been poor investments of any kind, it just happened to be sub-prime mortgages in this case), banks don't have credit to give out anymore. This will put a stop to growth in the private sector as businesses can no longer use loans to expand, and will hurt many industries that sell very high value items (like cars) because consumers can no longer take out loans. This is the problem the Bailout is trying to correct.

It's Not Meant to Line the Pockets of Fat Cats

Which isn't to say it won't, of course (though new versions are being pushed to eliminate any so-called 'golden parachute' clauses, which would reward higher-ups for incompetence). However, the bill is meant to rescue the companies, not the people. Remember, these companies run our country's financial infrastructure (see the credit problem mentioned above). It's in our best interests to keep them running. If we simply let them flop, the same thing may happen to our economy.

I'm not saying the Bailout is the best, or even the only solution, but whenever people talk about how we need to kill the bill because it's corrupt through and through, and only meant to make the rich richer, I cringe a little. That's just not the case. Call your senator if you must, but think about it a little first.