Here is how modern economics is played. You need to know this so you know how to protect yourself.
Picture 4 groups: government, the middle class, the banks, and the speculators. 3 out of 4 groups have acted badly in the housing meltdown.
Consider:
1. Speculators bought houses they couldn’t afford to try to make a quick buck in real estate. When they failed, they get bailed out, and in some cases get to stay in homes at a much reduced rate, on the backs of the middle class.
2. Banks (some) lent speculators money they didnt have to buy houses they couldnt afford. If you didnt make bad loans, you faced government censure. When the banks received bailout money they paid off bad loans, not the good loans.
3. the government: underwrote the bad loans, darn near required the bad loans to be made, then raised taxes on the middle class to cover the banks losses. Then the governmant allowed banks to write off the bad mortgages and keep the good ones paying.
4. The middle class pays for everything, but they didnt get their mortgages and credit card balances written off, even though they have demonstrated they are the bty far, the best stewards of money from among the 4 groups.
any questions?
extra credit: if you were a good steward of your money and the planet you bought a car that gets good gas mileage. Now you get to pay for the morons who bought cars that get terrible mileage, who get a handout at your expense.
because the government is shocked…shocked! that people will lineup for free money, they are now throwing another couple of billion after the first billion in the cash for clunkers program.
Survival and reward for the most unfit. That’s how you get ahead in modern economics.