The Instigator
HandsOff
Pro (for)
Winning
47 Points
The Contender
bigbass3000
Con (against)
Losing
21 Points

Any government attempts to bail out homeowners in foreclosure are wrong and unfair to tax payers.

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Voting Style: Open Point System: 7 Point
Started: 3/26/2008 Category: Politics
Updated: 8 years ago Status: Voting Period
Viewed: 1,896 times Debate No: 3388
Debate Rounds (3)
Comments (8)
Votes (21)

 

HandsOff

Pro

The finger has been pointed in just about every direction when it comes to who's to blame for our current mortgage "crisis." Many think government should step in and right the "wrongs" which brought about said crisis, whether they be on the part of predatory lenders or prevaricating borrowers. I say hands off! Let the market handle this one. Not only will government intervention impede a recovery in the housing market, it is simply wrong to have innocent tax payers bear the cost of bad judgement on the parts of lenders and borrowers. By "government attempts" I am obviously referring only to those that would require tax-payer funding.
bigbass3000

Con

I am obviously referring only to those that would require tax-payer funding.", I can see you are for a free market, but do you realize that the Great Depression was caused by free market. Laissez-faire There is much debate over the relationship between laissez-faire economics and the onset of the Great Depression. Some economists and historians (such as John Maynard Keynes) argue that laissez-faire economic policy fostered the conditions under which the Great Depression arose. The people caused the housing market crisis not the government. Arguably, the stability of household finances is the
biggest single unknown in the U.S. economy today. We have published several pieces on the issue. After analyzing the household sector closely, the author
proposes some hard-nosed solutions for the nation. THE STATE OF U.S. HOUSEHOLD FINANCE is worsening rapidly. Every quarter, households sink more and more into debt; every quarter, they deplete more and more of their available liquidity and savings; every quarter, they succumb to greater financial fragility. Some economists have argued that these trends are not that worrisome, for at least three reasons. First, the value and distribution of the debt-service ratio of property debt (debt servicing on mortgages, home equity loans, and land) in 2004 were not much higher than in 1995 (Dorns and Motika 2006). Second, if the level of indebtedness has risen sharply and its quality has declined, it seems that the debt has been incurred for reasonable
purposes, and so the net wealth of households has increased significantly through rising housing prices (Greenspan 2004; OECD 2006). Finally, a higher consumer debt burden (leaving aside property debts) is not in itself a reliable lead indicator for economic slowdown (Garner 1996; Maki 2000). These views, however, can be criticized on several grounds. First, if the 2004 debt service burden and other indebtedness measures are indeed similar to those in 1995, their impact on the financial load of households is very different. Second, since 2004 household finance has worsened considerably, in terms of both level of indebtedness and liquidity. Thus, households may not be able to respond to emergency financial needs as well as before. Third, even though the net wealth of households has increased in absolute terms, this is due mainly to higher prices for illiquid assets (houses). Thus the higher net wealth does not directly reflect a higher cushion against financial stress, both because
houses are illiquid and because people have to live somewhere. Equity may provide an indirect cushion via the borrowing opportunity that it provides, but the ratio of net worth to total assets has declined sharply over the past five years. In addition, in periods of crisis, the pessimism of loan officers may prevent the availability of refinancing operations. Finally, if higher indebtedness is not in itself a source of problems and even may reflect a dynamic economic activity, its higher level and lower quality increase the sensitivity of the economy to changes in interest rates, incomes, asset prices, and expectations of debtors and creditors. Such sensitivity is increased when net cash flows decline and savings decrease significantly. Given the current state of household finance, there is good reason to worry about what the future could look like. The burden of growth on households has reached unusual proportions. Indeed, while average economic growth has been only a little over 3 percent in the past fifteen years—the lowest rate since World War II—the share of that growth attributed to consumption is more than 70 percent. As a consequence, the financial position of consumers has worsened significantly. This paper presents a more detailed study of the evolution of
households' finance, outlines some of the potential problems, and offers suggestions to help restore financially sound economic growth. This paper claims that unless the federal budget deficit is at least 5 percent of gross domestic product (GDP) and short-term rates are low, the financial situation of households will probably continue to worsen. If the U.S. policymakers want to maintain consumption-based growth, they need to create the means to do so. Current trends seem to be unsustainable. Economic growth in the past sixteen years has weighed heavily on households, and by 2000 some authors were already highly preoccupied with the financial state of the overall private sector (Godley 2000; Wray 2000). Since that time, households' financial fragility has
increased considerably, to a historically high extent. Although the policies implemented after the 2001 recession provided a breather, that relief was not sufficient to help strengthen the financial situation of households. The current expansion has much in common with the expansion of the 1990s. For example, Figure 1 shows that during both periods, consumption spending made an unprecedented contribution to economic growth—72 percent in the 1990s and 71 percent in the 2000s. Another similarity is the trend in macroeconomic balance. Figure 2 shows that at the end of the last expansion, in 2000, the private sector had a negative net financial balance (gross private saving minus
gross private investment) that represented about 4 percent of the gross domestic product (GDP). This was the logical counterpart to the government's willingness to generate a surplus and the tendency of the rest of the world to save dollars: I – S = T – G + J – X (where I = investment; S = saving; T = taxes; G = government spending; J = imports; and X = exports). The last recession and the "war on terror" led to a reversal in the fiscal policy of the government as tax cuts and government expenditures helped the economy recover. However, the growth generatednwas never sufficient to allow the private sector to generate a positive financial balance, and the same trends that were present before the recession reappeared after the fourth quarter of 2003. The rest of the world has been accumulating even more dollars, and the government has once again been willing to generate a surplus. Thus, in order to
maintain economic growth, the private sector has had to return to its frenetic spending habits. During the second and third quarters of 2006, the net injection of dollars by the private sector represented on average 4.1 percent of GDP, not too far from the historic high of 4.5 percent in 2000. Compared to the previous expansion, the current one is sustained by much worse ratios of saving, liquidity, indebtedness, and net wealth. Thus, for the first time since World War II, as seen in Figure 3, households (and nonprofit organizations) have recorded negative levels of personal saving, which has been on the decline since the early 1980s, when it reached about 12 percent of disposable personal income. The last recession stopped this decline at 2 percent of disposable income, but, with the burden of growth back on their shoulders, households have been drawing down the rest of their available disposable income, and since the second quarter of 2005 their saving has been negative. On average, they have been dissaving 0.85 percent of their disposable
income each quarter, which is about $80 billion that had to come from somewhere other than their disposable income each quarter. Given that the measure of personal saving does not include the cash outflows induced by interest payments on mortgages and payments of principals, the actual size of dissaving is even worse.
My arguement is a little longer by the way so just read what you think and rebut and I will rebut in the final round.
Debate Round No. 1
HandsOff

Pro

My debate has nothing to do with whether government attempts to bail out homeowners will produce a positive or negative outcome. That's a debate for another time, and I would argue that government intervention contributed greately to the great depression.

My debate resolution states only that it is wrong and unfair for the government to make tax payers bail out people and businesses which have made bad investments or bad financial decisions-- regardless of whether ignorance, deception, bad market timing or gross negligence is to blame.
bigbass3000

Con

Okay, well look at it this way then if you don't bail out this people who go into debt which by the way is a huge portion of AMerica, then it affects those taxpayers who are paying to fix this problem. It all really is for the greater good and by the way, THe Great Depression was caused by a free markey and goveenment intervention is good. If we had a good system it would be beneficial to everyone.
Debate Round No. 2
HandsOff

Pro

Again, you are making an emotional appeal in favor of the positive outcome you feel government intervention will produce. You have in no way refuted my claim a government bailout is wrong and unfair to the taxpayers. Even if you are making an unclear attempt to claim that the ends of such intervention justify the means, you are making no reference to rightness or fairness. I may be posting this debate again, because I don't think we've given the readers anything to chew on with regard to whether tax payers should be financially responsible for the economic misjudgments of their fellow citizens.
bigbass3000

Con

It is fair, because we are part of a collective society, and being such the wealth must be distributed. Bailing out homeowners does not hurt anyone or cause unfairness, because you never know when it is going to happen to you. Vote neg
Debate Round No. 3
8 comments have been posted on this debate. Showing 1 through 8 records.
Posted by Solarman1969 8 years ago
Solarman1969
I think this whole "bailout" thing is fascinating to watch

It really shows the difference between repub and dems

dems lie cheat steal and obfuscate

repubs should stand on principle AGAINST this BS and CALL the dems out

Dodd, Frank and the others should be FORCED TO RESIGN for their roles in the failures of Fannie anf Freddie

Crooks like raines , gorleick and Johnson should go to JAIL

STAND UP CONSERVATIVES !
Posted by HandsOff 8 years ago
HandsOff
Yeah, that's one thing about the private market-- bad ideas have a way of dissapearing. The govt. on the other hand, just imposes one more bad idea to resue a previous bad idea.
Posted by Leftymorgan 8 years ago
Leftymorgan
Has the Government ever run anything efficiently? I think not, look at social security and tell me they know what they are doing. At least in the free market things will sooner or later work their way out. Government involvement just makes things worse than if left alone to correct itself.
Posted by HandsOff 8 years ago
HandsOff
Some liberals had to have voted for me here. Where is the consistency? This is no different than bailing out people with social programs because of bad decisions they've made in their lives. I should get blown out with party-line voting on this one.
Posted by Solarman1969 8 years ago
Solarman1969
Totally agree with pro

BAD decisions should not be rewarded, and paid for by those who make GOOD decisions

there are two words politicians need to use more

TOO BAD!
Posted by DucoNihilum 8 years ago
DucoNihilum
Totally fallacious arguments, bigbass.
Posted by HandsOff 8 years ago
HandsOff
Bigbass,
Your round 3 argument finally addresses the debate topic. Too bad it has concluded. I have some mutual funds that did poorly this year, and my house dropped in value by a couple hundred grand. Where do I go to get my money back from the tax payers?
Posted by Danielle 8 years ago
Danielle
Amen, HandsOff.

Blah Blah Blah... 25 characters.

There we go.
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Vote Placed by Leftymorgan 8 years ago
Leftymorgan
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Vote Placed by HandsOff 8 years ago
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Vote Placed by Solarman1969 8 years ago
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