I realize I'm like a year and a half late with this, and I think the idea I'm presenting is stolen from someone else -- probably someone who had evidence to back it up -- but I still can't help writing about this.
If the money given to bail out big banks last year, had instead been given to the people who owed the banks money, it would have solved more issues. Whether it's moral or not or whether it might encourage bad economic behavior at a lower level in the future is still up for debate, but there's little doubt in my mind that that money could have been used to both minimize foreclosures (i.e. homelessness), and in turn to keep the big banks chugging along.
One argument could be made that the money was a bargaining chip for bank regulation, but honestly, did the regulation do much? and even if it did, the government has the right to regulate things, that's what we elect them for.
Just think, if we had instead bailed out all the people whose first homes under x feet per person were being foreclosed upon, wouldn't that simply be subsidization of affordable housing, of which there's a chronic shortage in this country anyway? No it wouldn't be fair to those who had worked hard to afford their homes, but neither was bailing out millionaires who pay executives huge sums to make dumb decisions. And I'd suggest that this kind of bailout is less likely to modify future spending behavior than the bank bailout that we did see, based purely on the expectations of rationalism in consumers vs. corporations.
Furthermore, a bailout of many foreclosures might have staved off the economic and real-estate tailspin that the economy is in now. Perhaps it could have cushioned the blow for homeless shelters, tax revenues, those attempting to sell their houses, and other businesses (architecture) that rely on real-estate development, ownership and value maintenance.
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