So let me get this straight. For a few years now, the financial industry has made billions in risky subprime loans by essentially tricking people into believing they can borrow more than they’ll be able to pay back and now that this brilliant idea is going south, people are floating the idea of a government bailout. Well, screw ’em. If you’re foolish enough to loan hundreds of thousands of dollars to people who can’t even balance their checkbooks, then you deserve to be as poor as your customers.
Then again, this is all assuming that these creditors were giving out loans in good faith in the first place. The way it looks to me is that these subprime loans were always about locking people into high interest loans for a few years until they went broke after which the banks would take back the house and any more money they can squeeze out of the debtors (thanks, bankruptcy reform!). Once they unload the house, which has almost certainly grown in value, they make a nice profit on top of the cash they gouged out of their now-homeless former customers.
The reason this has all come back to bite lenders in the ass is because they lacked the foresight to realize that when their customers were going broke, everybody else would be going broke as well, which would drive down the value of their repossessed houses and make them harder to unload to the next poor sucker who just wants to move out of an apartment.
In a truly free market economy, we’d be pointing these idiots towards the back of the line at the local soup kitchen, but these guys had a backup plan. They bribed (I mean, “lobbied”) every level of government that’s willing to cash their checks, insisting that if they pay the price for their moronic business practices, the entire economy will suffer. In short, they don’t need government bailouts to help themselves, but to help us.
Tom adding: relevant cartoon here, particularly the last panel.