This post came about after reading this article at CNNMoney.com about how we’re doing with the Loan Modifications.
I’ve said it before, and I’ll say it again (and you don’t have to like me for it…but I feel it’s the truth). Capitalism must be allowed to play itself out. You cannot change the rules of a game that is already set in motion and so indoctrinated into the very fabric of our economy it might as well be likened to Gravity in Nature.
Bailouts, whether for the financial industry, or the auto industry, or any other industry are band-aids…short term fixes that wear off and lose their stickiness after a relatively short time. The problem – as I’ve said before is that we’ve got a broken leg, and you can’t fix that with a bandaid. A broken leg must be re-set (and it’s going to hurt, big time) and then allowed to heal over time if it’s ever going to mend properly.
Do I feel bad for the people losing their jobs in the auto industry and the people who are losing their homes to foreclosure? Absolutely. They are the casualties and unfortunately most of them had no say in how it went down – the blame and fault doesn’t lie with them.
But regardless of how I may feel about them and their situation, companies that make cars that people don’t want to buy are supposed to go out of business. Companies that are mismanaged to the point where they need BILLIONS of dollars in taxpayer money to sustain them for just a few months are absolutely supposed to go out of business. People who bought a home they couldn’t afford because they thought they’d be fine and able to figure it out the details later CANNOT keep their homes (as much as we’d all like that to be the case…).
That’s trying to cheat the game…it’s trying to work against gravity…but gravity is a natural law…it’s the rule of the game…you can’t change it and fighting it will only put you in a worse position than you were in beforehand.
Does it hurt? Like setting a broken leg – yes it does. Is a bailout going to help? In the short term – perhaps…in the long term…absolutely not. Funds transferred to a company that is unable to turn a profit are not funds well-spent. Even if it keeps you in business for an extra 4 months. Loans modified to help you keep the house you couldn’t afford to begin with…? While it may “feel” better in the short-term…it’s a band-aid on the American Economy’s broken leg…and that’s NOT helpful in the long run.
Capitalism…this game…must be allowed to run its course…as much as it hurts to do so – it will hurt more if we try and reverse gravity.
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Josh Hanoud is the #1 Top Producing Agent at Tropic Shores Realty in Spring Hill, FL and in the top 3% of all real estate agents in Hernando County, Florida (2007). He also happens to be the co-founder (along with Natalie) of the
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