Morality of financial Bail out

[royal_archer]

I would like to get some additional perspectives on the moral issues surrounding the pending financial bailout.

I believe that the Church is very clear that communism is immoral and this bailout would be the biggest single government incursion into the private sector since the cold war. I also know it is wrong to take money from one individual (against their will) and give it to another. So obviously it is immoral to directly support legislation shich uses tax payers dollars to bennefit a sector of the private ecconomy.

However, what are the moral implications of owning stock in these times. I have money in 401 Ks. The value of them has gone down over the last few weeks. I have no problem with that, it was my choice t put the money in stock based funds as opposed to more stable securities. I essentially gambled that they would go up more than the other securities and I lost to some extent. I now have stocks that are about 80% of their value a year ago. I now have to decide what to do with them. If I leave my money in the value will go up whether they pass the bail out or not. However, they stand a chance of going up significantly if the bail out is executed. If they go up because of a bail out then in essence I would be the recipient of stolen goods. On the other hand, governent regulation has made it very hard to extract my money from my 401 Ks.

Thoughts

 

[Atreyu]

Communism is condemned by the Church because it denies the dignity of the person. The Church certainly does not condemn the State buying or owning assets such as banks, utilities or anything else. Furthermore, the Church recognises the right of the State to impose taxes on the populace and to spend those taxes. This money is not “stolen”.

There is nothing obviously immoral in this US government bailout. I would suggest concentrating more on the financial aspects (particularly the potential consequences) of the bill rather than the moral aspects.

 

[JimG]

I believe that the Church is very clear that communism is immoral and this bailout would be the biggest single government incursion into the private sector since the cold war. I also know it is wrong to take money from one individual (against their will) and give it to another. So obviously it is immoral to directly support legislation shich uses tax payers dollars to bennefit a sector of the private ecconomy.

I would hardly say that this bailout is the biggest single government incursion into the private sector. Government had made a great many incursions into the private sector:

The GI Bill: Government money went to WW-II vets to go to college; govt guarantees helped them buy homes. (Note, the initial legislation was called “The Veterans Readjustment Act of 1944.” OK, it helped them readjust. But it turned out not to be temporary. It’s been renewed consistently with more generous terms and is still in effect today.

FHA: Insured home ownership for a lot of people who couldn’t come up with the down payments lenders wanted. Would you ask me to co-sign for your home loan? Taxpayers do co-sign for everyone with an FHA, VA, or govt backed loan.

Social Security: Payments go directly from your paycheck to people receiving social security.

Medicare: Payments go from your paycheck to older Americans for health care.

The list could go on. The list of government agencies involved in the private sector go on and on. It keeps a lot of bureaucrats employed in Washington DC and throughout the country.

 

[royal_archer]

I would hardly say that this bailout is the biggest single government incursion into the private sector. Government had made a great many incursions into the private sector:

The GI Bill: Government money went to WW-II vets to go to college; govt guarantees helped them buy homes. (Note, the initial legislation was called “The Veterans Readjustment Act of 1944.” OK, it helped them readjust. But it turned out not to be temporary. It’s been renewed consistently with more generous terms and is still in effect today.

FHA: Insured home ownership for a lot of people who couldn’t come up with the down payments lenders wanted. Would you ask me to co-sign for your home loan? Taxpayers do co-sign for everyone with an FHA, VA, or govt backed loan.

Social Security: Payments go directly from your paycheck to people receiving social security.

Medicare: Payments go from your paycheck to older Americans for health care.

The list could go on. The list of government agencies involved in the private sector go on and on. It keeps a lot of bureaucrats employed in Washington DC and throughout the country.

All of these things orriginated before or during the cold war which was why I put in that qualifier.

 

[JimG]

All of these things orriginated before or during the cold war which was why I put in that qualifier.

Sorry, I didn’t notice the qualifier. Government does tend to get pretty involved. But, as in this case, we usually invite it in!

I still think the bailout was probably needed, and may not even be enough to solve the crisis; but I can’t deny that it is a big intervention.

 

[royal_archer]

Sorry, I didn’t notice the qualifier. Government does tend to get pretty involved. But, as in this case, we usually invite it in!

I still think the bailout was probably needed, and may not even be enough to solve the crisis; but I can’t deny that it is a big intervention.

Needed can be a vague term. The American ecconomy is in transition from a protected ecconomy to a global ecconomy. We are now competing against cultures who have been accustomed to a much lower standard of living. In the past these countries had a minimal production capability. That is changing. We are now loosing jobs to these foriegn cultures. As a result our ability to earn money is no longer supportive of our standard of living. We have not reacted quick enough and are now being trying to maintain a standard of living above our collective mean. This gap NEEDED to be fixed. One way is to close the gap between our standard of living and our productivity and the other is to find new sources of debt to finance the gap. The credit in the finance industry is tapped out so now we are tapping into the governents debt capacity.

So if we max out our credit cards we could say we need another line of credit or you could say that we need to live within our means. So while I believe I agree with you that something needs to be done, I do not believe that shifting the debt is the right answer.

 

[rlee9112]

I think there a number of moral questions about this bailout that are difficult to parse out:

1. responsibility of banks not to lend to those who cannot afford vs. responsibility of individuals not to assume more debt than they can handle
2. responsbility of financial services firms to disclose the quality of the mortgages in their mortgage backed securities vs. the responsibility of the buyer to conduct due diligence
3. freedom of a company to make its own decisions in the interests of shareholders vs. duty of regulators to call these companies on their risk-taking behavior and to limit it
4. duty of government leaders to intervene when credit markets seize up vs. responsibility of involved firms to resolve the issue in the private market.

There are many issues. At the heart, I think if people strove to be honest and live within their means we would not be here.

In all of this there is a good deal of finger pointing. Companies were greedy; consumers took on mortgages they could not afford; government let it happen; Congress is now using taxpayer money without thinking it through.

But really, I think all of us as a culture and as individuals need to think about how we have lived beyond our means. I think that is the issue. We need to look at whether we are living with more than we need and to make decisions on what to change.

We’ll probably be in this mess for the foreseeable future. Now is the time to get together as a culture and “de-leverage” ourselves, just as the banks are doing now. It’ll be a painful process but it is necessary. Perhaps it will lead people closer to God and closer to each other, rather than closer to “things.”

 

[po18guy]

It is a matter of poor timing. Last year, no problem. Next year, fine. This year? Elections coming! Must give away everyone else’s money, and quick!

We have lost our republic.

 

[royal_archer]

I think there a number of moral questions about this bailout that are difficult to parse out:
…
We’ll probably be in this mess for the foreseeable future. Now is the time to get together as a culture and “de-leverage” ourselves, just as the banks are doing now. It’ll be a painful process but it is necessary. Perhaps it will lead people closer to God and closer to each other, rather than closer to “things.”

My question is more on the order of what we as individuals. Let’s face it, the feds are no all that good at paying down debt. So we can expect a generation or two to have to deal with the ongoing payment for the interest on this debt and eventually paying it off. But that future pain will buy us 700 Billion getting dumped into the ecconomy. Some people are going to bennefit. the corporations, the politicians, the government workers who will be hired to manage this program, the people who have no intent of following through on their promisses. So is it immoral to try to get a piece of the pie? The way I look at it I could try to avoid any bennefit, Just sit back and let it play out, or be proactive and try to possition myself to be one of the recievers. What are the moral implications?

 

[royal_archer]

It is a matter of poor timing. Last year, no problem. Next year, fine. This year? Elections coming! Must give away everyone else’s money, and quick!

We have lost our republic.

And one of the few redeaming parts fo the law just didn’t cut it for me… part of the law is a new loop hole eliminating the excise task on certain arrows and arrow shafts.

No, I am not kidding, this was stuck into the 451 page law.

 

[Dee_Dee_King]

catholic social teaching is probably the most negelected of all. it’s too bad because it’s wonderful stuff.

the church supports the following:

• free market
• private property
• unions and guilds
• subsidiarity
• solidarity and common good

the church condems the following:

• socialism
• big government
• big buisness
• materialism
• obscene wealth and poverty

which side does this bill favor? i think it’s easy to see which one is anti-catholic.

 

[Atreyu]

catholic social teaching is probably the most negelected of all. it’s too bad because it’s wonderful stuff.

the church supports the following:

• free market
• private property
• unions and guilds
• subsidiarity
• solidarity and common good

the church condems the following:

• socialism
• big government
• big buisness
• materialism
• obscene wealth and poverty

which side does this bill favor? i think it’s easy to see which one is anti-catholic.

It seems to me you’re saying the Church forbids the State from buying mortgages. Prove it.

 

[Atreyu]

My question is more on the order of what we as individuals. Let’s face it, the feds are no all that good at paying down debt. So we can expect a generation or two to have to deal with the ongoing payment for the interest on this debt and eventually paying it off. But that future pain will buy us 700 Billion getting dumped into the ecconomy. Some people are going to bennefit. the corporations, the politicians, the government workers who will be hired to manage this program, the people who have no intent of following through on their promisses. So is it immoral to try to get a piece of the pie? The way I look at it I could try to avoid any bennefit, Just sit back and let it play out, or be proactive and try to possition myself to be one of the recievers. What are the moral implications?

There is nothing wrong with the government having debt, so long as it is not usurious. Most successful companies in the world have a certain manageable amount of debt; it’s called “leverage”. Why should a government not use leverage as well? It stimulates growth.

That being said, it is obviously vitally important to keep debt at a manageable level.

 

[po18guy]

And one of the few redeaming parts fo the law just didn’t cut it for me… part of the law is a new loop hole eliminating the excise task on certain arrows and arrow shafts.

No, I am not kidding, this was stuck into the 451 page law.

I note that the “Cathoic” speaker of the House, who exulted in turning down the first one gladly passed a larger, more wasteful and immoral one…

The Bishops have their work cut out for them.

 

[Dee_Dee_King]

It seems to me you’re saying the Church forbids the State from buying mortgages. Prove it.

you’re avoiding the point. you need to take the bail out bill as a whole. does it turn our country closer to socialism–yes. does it give more power to big buisness and big government at the expense of the little guy–yes. does it create a distortions in the free market–yes. does it encourage us to take on unreasonable debt–yes.

there is nothing good about this bail out bill. it is the most anti-american piece of garbage since roe v. wade.

 

[Krik]

3 years ago I was counting my equity and was heading toward millionaire now I will be lucky if I am a 100.000aire. What about the small investor. Not a word. I want my 600,000 and I want it now from the U.S. government. They (you the taxpayer) owe me.

 

[royal_archer]

There is nothing wrong with the government having debt, so long as it is not usurious. Most successful companies in the world have a certain manageable amount of debt; it’s called “leverage”. Why should a government not use leverage as well? It stimulates growth.

That being said, it is obviously vitally important to keep debt at a manageable level.

You could categorize debt into two cattegories debt financing future bennefit and debt financing shor term benneffit. the first category would be for infrastructure or longer term purposes such as an individual buying a house or a car; a business buying a factory or a piece of equipment; or a governemnt buying a road. in all cases the bennefits will out last the debt. each year while paying down the debt the bennefit derived outweighs the cost in terms of prinicipal and interest. The other category is when debt is incured for a one time or a short time bennefit. Such as a family buying dinner or going on vacation; a company making payroll, or paying for annual costs; or the government paying for a one time bennefit. I believe the bailout falls into the second category. In this case it is only appropriate to incur debt but only debt to the level that can be paid down prior to the next similar event. This revolving short term debt is ok as long as it does not snowball getting larger and larger with expenses exceding income.

In either cas debt itself is not sinful as long as it is eventually paid back. But in the case of the bail out debt, those who are bennefiting are not likely to pay it back. Therefore this “amnesty” program (like many other socialist programs) provides disproportionate bennefit for some at a disproportionate expense to others. So to summarize: the problem is not the debt itself but the transfer of debt from one group to another.

 

[mary_bobo]

It seems to me you’re saying the Church forbids the State from buying mortgages. Prove it.

My goodness. I didn’t see anything like what you allege in that post. Let’s not “suppose” what another poster means.

 

[Texas_Roofer]

So much here, but out of order .

I would like to get some additional perspectives on the moral issues surrounding the pending financial bailout.

morally neutral

I believe that the Church is very clear that communism is immoral and this bailout would be the biggest single government incursion into the private sector since the cold war.

social security and Medicare on a daily basis blow out all other issues including financing a war!

……………………………. I essentially gambled that they would go up more than the other securities and I lost to some extent……

it is not gambling based the earning are the base not luck

……………………………

Needed can be a vague term. The American ecconomy is in transition from a protected ecconomy to a global ecconomy. We are now competing against cultures who have been accustomed to a much lower standard of living. In the past these countries had a minimal production capability. That is changing. We are now loosing jobs to these foriegn cultures. As a result our ability to earn money is no longer supportive of our standard of living.

We chose to spend more than we earn which is not what you said

We have not reacted quick enough and are now being trying to maintain a standard of living above our collective mean. This gap NEEDED to be fixed. One way is to close the gap between our standard of living and our productivity and the other is to find new sources of debt to finance the gap. The credit in the finance industry is tapped out so now we are tapping into the governents debt capacity.

No, “find new sources of debt to finance the gap “ the “gap” cannot be financed money can be stolen to use but no “finance” allows “debt” to go unpaid. The gap you speak of cannot be paid* and thus the issue.

So if we max out our credit cards we could say we need another line of credit or you could say that we need to live within our means. So while I believe I agree with you that something needs to be done, I do not believe that shifting the debt is the right answer.

The concept of give money away today and get it back through some future unplanned system is not true financing.

You could categorize debt into two cattegories debt financing future bennefit and debt financing shor term benneffit. the first category would be for infrastructure or longer term purposes such as an individual buying a house or a car; a business buying a factory or a piece of equipment; or a governemnt buying a road. in all cases the bennefits will out last the debt. each year while paying down the debt the bennefit derived outweighs the cost in terms of prinicipal and interest.

(*) Now you got it. The “return” must outweigh the cost thus the project can be “financed” meaning diverting the money of others until the “benefit” returns the money

The other category is when debt is incured for a one time or a short time bennefit. Such as a family buying dinner or going on vacation; a company making payroll, or paying for annual costs; or the government paying for a one time bennefit.

Now you lost it again. This is not real debt, this is closer to thief because there is no plan in place to derive a “benefit” which returns the money. So no legitimate ability to divert the other peoples funds

 

[Dee_Dee_King]

here’s a good synoposis of what happened during the housing bubble

Comment by The Housing Wizard
2008-10-04 09:17:30 don’t think the talking heads are talking about the speculative and crime aspect of the housing inflation between 2004-2007. To try to blame it on giving lower down breaks for the striving lower classes is a bad rap I think
to a point .Sure some of those policies did set the stage for lack of oversight in the name of getting more numbers of borderline buyers in for a lower down ,but the Housing boom than turned into a mania where all classes went for the get rich quick nature of the boom . Leverage without qualifying became the investment game because of the excess money provided by Wall Street