It’s interesting how things change. A few years ago if I told someone I were majoring in finance, it was no big deal. Today, when I tell someone the same thing, I get a speech about greed, housing bubbles, derivatives, and corruption.
(Sidebar: there are countless people who know that derivatives are evil, but who do not know what derivatives are. Makes me laugh.)
So, recently, it seems that people are of the opinion that if Wall Street gets a bailout, then Main Street should too. The common suggestion is something of a nationalization of the American public’s debt to allow the government (read: taxpayers) carry the burden of too much leverage.
A Good Idea?
Now I’m no fan of bailouts. And I put corporate welfare on a lower level than social welfare programs. Take care of people before businesses, basically.
So obviously I can see where people have a problem with corporate bailouts when the public doesn’t get the same reward. In effect, the rich got richer while the poor were left to be poor. There’s obviously a problem there.
But I wonder what the true effect of an Average Joe bailout would be. If we were to nationalize some or all of American mortgage and student loan debt, do you think it would have a substantial impact on those who face financial hardship?
If we were to take everyone with a negative net worth to a net worth of zero, how many do you think would manage to maintain a positive net worth?
What if we just reset everyone’s negative wealth to zero? Do you think the people in financial pain now (from any cause) would stay out of harm’s way?
I’m curious if this thought is only prominent among college-aged kids.