Why Bailouts Will Never Be Used to Save a Foreclosure

Real estate and the free market will always experience cycles. There will be boom periods and then there will be periods of depreciation. In some instances, the negative trends will be treated with much media fervor because the media will generally draw an audience if the reporting strikes the right emotional cord. In some instances, pulling these emotional cords is sometimes used to affect policy and law. One such policy that pundits are attempting to influence involves drawing the government into an agreement to bail out those who are suffering from the current foreclosure crisis. While some would hope and pray for a bailout this is most definitely a next to impossible scenario to occur.

First, the number of homes that are currently in foreclosure in the United States has supposedly topped two million. There is simply no way the government could afford a complete bailout (or even a partial sliding scale bailout) to this many number of homeowners. The administration costs associated with such a bailout much less the bailout itself would cost in the billions. This would simply be a totally unfeasible process to undertake.

There is also a very dangerous message that would be sent in the advent of a massive federal bailout. That message would be that people are not required to be fiscally responsible for their actions. In other words, it doesn’t matter what you borrow or how you default because the government will be there to pay off your mistakes. Such an attitude would be a disaster for any nation’s economy.