Tuesday, September 30, 2008

Bailout Bill

I'm following the discussion from abroad, living myself in Germany. As our economy seems to be as affected by this mess as yours, I thought to post my thoughts as well.

I have a question? Who got all the money in the first place. What happened with these now so-called toxic loans in the first place? Before they became toxic, they were regular mortgage backed loans to American people, which were then enabled to buy houses or enabled to finance their living style.

People, who shouldn't have gotten a loan in the first place, as their regular income did not allow them to pay that loan back, got a loan, as that loan made the broker and the bank money in commissions.

Surprise....Some of these people really were not able to pay back their loan. But I bet there are a lot, actually most likely the majority, of the people, who got a loan, who are still paying that loan regardless how difficult it is, as they want to keep their home for their family, as they want to continue to finance the eduction of their children for a better future.

At least, that's what happens here in Germany, if someone has a house, who is nearly bankrupt. He will still do whatever necessary to keep the house.

Allowing people to have a roof over their head, even if they can't afford it. Here in Germany it's called social welfare. It's something the government and the communities have to pay for. Everyone has a right to receive at least the minimum necessary for living and that includes a place to live.

I don't know, if it's the same in the US, but taking a bigger view to me it seems, the banks were doing the governments job, when they gave people, who could not afford a home, the money to buy one.

Sure, the banks then did, what every good manager would do, they passed the risk on, they created instruments, gave them a grand name and sold the mortgage backed loans to someone else. That one sold it again and made a profit and so on and suddenly the world found itself in the mess we are now in.

But that doesn't change the fact, that our taxes and I say our taxes, because my taxes are used for this purpose as well here in Germany, should partially used to give every citizen in this country a place to live.
It doesn't need to be a big one, but I think every family, every kid has the right to have a roof over their head so it has a chance in life.

In Germany this is done by a program called Hartz IV, it's not the best, but it provides the basic living necessities to those who need it. And that program is extremly expensive. We pay for it with our taxes.
The costs? 26B to 30B per year. That's about 250B for the last 10 years. And we have just 80.000.000
people living here. You have nearly 300.000.000 US citizen.

Do the math: The 700B for the bailout bill. Isn't that just the bill come due for a task the US-government had to do in the first place and neglected to do for at least the last 10 years?