Everyone is currently focused on the failing economy in one way or another. I felt a pressing need to discuss this issue and what I believe to be the problems. Lets attempt to start at the beginning and work up to present day.
Roughly 2005 – 2006 banks were loaning out money to homebuyers who had no ability to pay on houses that were above and beyond the value of the house. This caused the housing market to crash and banks to be stuck with outstanding loans that will never return
2007 – 2008 gas prices go on the rise. Businesses regularly raise prices to “cover costs”
Present day: banks and businesses are going under and laying off employees to keep in business. The President and other economists believe that these problems are being caused by people not spending money which is accurate, but not the root cause. Remember that raise in prices from the gas crunch? That price hasn’t gone back down with the gas prices. I believe that the problems we are experiencing today is greed and nothing more. If the businesses were to cut their costs people could afford their products and keep their employees employed thus fulfilling the circle of economics. Greed also accounts for the banks attempting to make as much money as possible off of low interest rates. Sorry people can’t pay back loans, but many of these loans would have been better off if the people could have given a button as collateral because the button would have more value than the house.
Now to the bailouts. Only in America can you do a piss poor job of managing money and the government swoop in and give you MORE money. “Yep you failed as a businessman, he’s a few million dollars to spend.” Recessions, historically, do wonderful things for our economy. America has gone through recessions/depressions before and came out stronger for it, why is this? Because no one bailed out failed businesses. If I have an employee that can’t do his job I don’t let him continue, I fire him and bring in someone who can. My stipulation for the bailout of a company would have been that the company’s entire executive management and board would no longer be employed there, obviously they don’t know what they’re doing or they would have this problem.
All that being said, the companies not receiving a bailout from the government this recession will come out as big players. Those companies see the value in managing their mistakes and are going to live by “what doesn’t kill you only makes you stronger.”