Sunday, October 5, 2008
This picture was taken in 1939, and shows an evicted sharecropper. Sharecroppers worked the land, and provided a portion of the crop back to the owner of the land. If the land did not produce, the sharecropper was evicted, which is what had just happened to the poor soul pictured above. When you see pictures like this, you wonder what happened to the person the next day. Did he find food to eat? How did he support his family? Did he ever recover from this tragic event?
Anyway, it looks like congress passed the $700 Billion bailout package. Last week I had expressed my opposition to the package. Their was some lively discussion on the post, with many people expressing support for the bailout. I think we can all agree on the fact that we are facing a crisis, and I think good people can disagree on what should be done about it. To me, the whole problem stemmed from the fact that there was too much easy credit in the system, and too many people were buying houses that they could not afford. This led to artificial appreciation of house values, as their were too many "buyers" who probably should not have been in the market. People then borrowed against these inflated house prices, and that spurred large consumer spending. Now, as the bubble bursts, we have a painful process to go through as the whole thing unwinds. My problem with the bailout package is that the fundamental problem to begin with was too much easy credit, and too much free money floating around the system. As this imbalance tries to correct itself, we try and "fix" it by pumping even more money into the system. It is as if we are going to throw money at it and hope we can keep the bubble inflated. I think that is impossible . . . we should take our medicine now, and then hopefully rebuild to a more rational and balanced endpoint.