Middle Class Bailout Trumps Company Bailouts

I am sure that all can agree that if our government is going to spend money, we would all prefer them to spend it wisely. Along the same lines, if you are going to give money, it would be better to give it to responsible entities. It is with these two ideas that I draw the conclusion that government is making a very bad mistake in giving the failing financial institutions the 'bailout' money.

The financial institutions have show marked irresponsibility in handling their business and their own money. I have pointed out to several friends that, "even a farmer knows to fertalize their fields and not over-burden the land or it will stop producing." Sadly, the financial CEOs haven't done much farming, it appears. Their business practices have been predatory and unrelenting. Effectively, they have bled their market dry and ensured their own collapse.

There are several practices that I often point out as being completly contradictory to any logic. I think most of them can be summed up with the statement, "the more money you have, the less you have to pay." For example, I heard a commercial this morning that a 'well qualified' person could buy a Lexus for only $389 a month. I, who am barely eeking out a living from paycheck to paycheck, am paying $450 a month for a much less expensive automobile, at a much higher interest rate. The financial companies call this 'mitigating risk,' however, anyone with half a brain will tell you it is actually creating much more risk that the 'not-so-well-qualified' individual will not be able to continue payments. I would have a lot easier time making that $389 payment each month. It currently costs the poor or middle class much more to live than it does the well-off. Companies basically tell people, "we see that you don't have as much money, so this will cost you more to buy." Where does that make sense?

Giving money directly to the lenders will do nothing to help the people who spend the money. The companies will - and have been - using the money to give themselves bonuses, buy up their competetors and take vacations. The will not 'write down' loans or do anything that will help their customers. They just got more money for ruining their companies and the national economy. (good job, ceos... ???) They will continue to do the same thing - for there are no consequences for their actions other than they keep getting richer.

A better option would be to give the money to the middle class directly. Do a bit of research and thinking then give the money to - maybe everyone with a Mortgage (or a Rent bill?) who makes under $250,000.00 a year (before taxes). Let them use it to pay their mortgage up to current - thereby eleminating the 'bad loans' and, at the same time, helping them stay in their homes. It would be good to require all A.R.M.s to be re-written to standard-term loans - on the paid-current amount. Sure, some people would just go out and blow their entire funds on big-screens and Ipods and cell phones, but the total 'wasted' amount would not nearly equal the 'bonuses' of two financial CEOs. Most people, however, would spend the money to first get current on all their bills, pay off some credit card balances, close too-high-interest accounts out and put a bit into savings and retirement. Then, without the burden of being behind, maybe even a little ahead, people would spend again and get us rolling again. Companies would have to adjust their practices to be competative in lending.

There are somewhere around 53 Million mortgage-holders in the US. 265 Billion would give each one $5000* to help shore up the economy. (a bit less than the $700 billion bailout that didn't work) Lets take me, for example: I would use $5000 to first, fix my home's foundation issues, which would take around $2000 of it, pay all my bills all up current, use half of what is left to pay down my credit cards, then pay a full house payment and sock the rest away for property taxes, etc.

On top of that, and even if we do go with the "give it to the companies" mistake, we really need some good business practices with some intelligence and logic put in place for these financial institutions. They need to reduce their CEO and executive salaries and bonuses to something within reason. Use that extra money they will now have to reduce interest rates and give regular employees (who are most likely also customers) a little raise or some better benefits. The companies must get back to a better balance of people over profit (of course, profit will always be important). To the financial companies I say, "Fertilize the fields you reap your profits from and help them grow."

* Of course, my math could be very off.. :D