Pros and Cons of the Obama Housing Bailout Plan

Pros and Cons of the Obama Housing Bailout Plan

President Barack Obama is really coming into such a dangerous era in the history of the United States of America. Right before the reigns were handed to the man, the carriage was already in shambles. He is left with such as big task of cleaning things up and finding a solution to one of the biggest problems facing our country and our world today. Make no mistake about it; this is one of the biggest problems that have hit America so far. If you have ever seen pictures of the great depression, then imagine that and know that what is happening right now is worse than what had happened back then. So what is Obama doing about the situation? Everyone knows it by now. The Obama bailout plan got congress to approve a 0 M fund to help families and companies that are drowning in the recession. Some 0 B will be spent on the housing bailout plan.

Right now, 56% of Americans support this program. This isn’t really overwhelming. 42% on the other hand, think that the plan should be flushed down the drain. With this kind of divided opinion, the bailout is skating on very thin ice. There are many criticisms pertaining to the bill circulating in the media. Here are some of the biggest criticisms of the Obama Housing Bailout Plan and some of the good things that the it is purportedly going to effect.

Cons
The 42% that opposes the bill have very good reasons to do so. First of all, it seems that the bailout rewards those who risked their equity and everything by buying expensive houses. Encouraging risky behavior is never good in any situation. Not letting people and entities face the full consequences of their actions is bad for the economy. In business, this is referred to as a moral hazard. If people, who bought homes even though they knew it was a risk, are rewarded by their bad judgment by being bailout out, then they will keep this thing in mind the next time they are facing the same decision. The same is true for the macrocosmic perspective of things. By bailing out banks and companies that created such a no risk evaluation culture in order to sell more, this is going to send a message that it’s ok to keep on doing the same thing over and over again. No good will come if the full reality of what they have done does not sink in. Also, those who did not risk their financial future are the ones going to suffer under the taxes that would bail the ones that took risks.

Pros
According to the President, this bailout is for everyone’s benefit. If the bailout is successful, then the failing businesses will slowly get back into its feet and the jobs will come back. Also, foreclosure signs tend to devalue the surrounding property by around 9%. Therefore, saving houses from foreclosure is in everyone’s best interest. If the housing bailout plan succeeds, then everyone’s property value will not go down and the economy will be on the rode to healing.