"Bail Out the Homeowners!"

Our nation is currently in three levels of debt: personal household debt, financial sector debt and public debt. With these problems coherent to each other, the government is hoping to solve them through a single bailout proposed by Paulson. This bailout states that the banks would be free from this debt and can resume lending loans to the people. It also states that the US treasury will be able to recover from the 700 billion dollar bailout cost, since only a small percentage of the underlying mortgages are bad. According to Paul Craig Roberts, with the support from Yale professors Jonathan Koppel and William Goetzmann, “Paulson’s plan is a fraud.” Though the bailout plan moves the assets from the bank to the treasury, it does not address the main conflict that has caused our nation to fall into this economic crisis. The diminishment of mortgage and home values will continue, if not worsen. The bailout should compensate defaulting homeowners and pay off the mortgages. Instead, it gives the banks more money to bring these homeowners into deeper debt. Koppell and Goetzmann’s main idea is that we can stop this financial problem if we could “restore the value of the mortgage-based derivatives”, which is the core problem. By doing so, it can lead to the halting of the decline in house values and end personal financial depreciation left by local tax bases from “houses being dumped on the market.” With this assertion, I believe that Paul Craig Roberts reveals to the people of our nation what is overshadowed by the government’s “action” towards their so-called aiding our societies economic crisis. The author uses logical appeal in order to give a reasoning towards why our “bailout” is technically not bailing us out, instead bringing us even deeper into a dreary period. Paul Craig Roberts’ approach through logic, I thought, was very effective as I am very convinced that the government would take advantage of this time to provide itself with personal advancement while covering it up with such a project as “aiding the people.” What makes this statement even more influencing is the author’s background. Once an Assistant Secretary of the Treasury in the Reagan administration, during a time where our nation was experiencing similar economic drawbacks that are presently taking place, you would conclude Paul Craig Roberts to be creditable in this argument, well supported by Yale professors Jonathan Kopell and William Goetzmann.