As I read the article “Big Bailout Lessons” I thought about the effects some of the bailouts caused throughout the United States. We have seen and personally experienced things over the last year that most “middle class” Americans would have never imagined. Firstly, gas and food prices across the country rose to an all time high. Secondly, the subprime mortgage crisis drove many homes into foreclosure. Lastly, large corporations broadcasted news of salary cuts, suspension of retirement plan payments and layoffs and other cut backs.
Gas prices reached an all time high last year at an average of $4.11 a gallon in July. This created a major strain on those that were already struggling to make ends meet. In addition to more individuals making use of public transportation it also drove many of them to trade in sport utility vehicles for mid-size or even compact cars in an attempt to cut back on costs. Increase fuel costs also triggered an increase in the price of food; making it more difficult to keep pantries fully stocked. Brand names became insignificant when grocery shopping as we focused on saving money wherever we could. With the great effort put forth to keep up with the rising price tags of fuel and food a larger problem surfaced.
The rising gas and food prices played a minor role in a larger problem in 2008; record numbers of homes went into foreclosure. Even though the inability of homeowners to make mortgage payments was an existing problem it became prevalent last year. Poor judgments by borrowers and high personal debt have been noteworthy sources of this crisis. However, a large portion of the responsibility lies with the lenders for giving credit to borrowers who did not meet the usual credit criteria. This issue hit close to home for me as several of my personal friends lost their primary residences as a result of the subprime mortgage tragedy. The government taking over Fannie Mae/Freddie Mac confirms the obvious need for...