Posts Tagged ‘Bailouts’
Government Bailouts: Good or Bad for America?
While there is an increased trend in the number of bailouts by the government recently, it is not all that of a new topic. Throughout US history, there have been many government bailouts, beginning in the 1970’s. The only difference is that today, the dollar amount of the bailouts has increased to great proportions. Until the recent hype of the stock market issues and the takeover of Freddie Mac and Fannie Mae, the term bailout was not something Americans used in everyday language. I believe it is due to the high influence of the media these days that bailouts are more widely covered these days along with the decrease in our economic efficiency. These billions and billions of dollars spent on these bailout programs may help the businesses that need it but it must also affect our economy in ways that are not effective.
To explain, a bailout usually comes about to prevent a business from going under because it is believed that the effects of the collapse will be much worse on the economy than to help liquidate the assets until the business can get back onto its feet. The government is most likely the one to fund the bailout, by ways of loans to be repaid once the business is back on its feet. Beginning with the first bailout in our governments’ history, the Penn Central Railroad, at a mere $3.2 billion, it is nothing compared to the recent $700 billion cop out plan to aid in the mortgage crisis. It does not look as if the bailout route will go away anytime soon.