Wall Street or Main Street: Who wins and who loses with the Bear Stearns buyout?

The Associated Press

The markets are stressed.

Featured Topic | Posted 36 weeks 6 days ago

Wall Street or Main Street: Who wins and who loses with the Bear Stearns buyout?

At some point, Wall Street will recover from the current financial crisis, and investors will wax nostalgic about the market bottom that presented a great buying opportunity. Of course, shareholders in Bear Stearns, the venerable investment bank, might be wondering about the upside of losing most of their investment this week in a government-backed buyout by J.P. Morgan.

And given the growing crisis, what about the average American who may have a few thousand dollars in a 401(k), and hundreds of thousands of dollars tied up in a home mortgage? No bailout is forthcoming.

Should the federal government bail out large financial institutions? Or should taxpayers help save homeowners from foreclosure? Does the current administration policy benefit Wall Street over Main Street?

Ben likes: Was Bear Stearns a sacrificial lamb?

Larry Kudlow/National Review Online

Let’s not forget that it’s the private sector that drives our great economy towards success. Prosperity-killing actions from Washington, like tax hikes, trade protectionism, or massive over-regulation, would certainly stunt the long-run health of the economy.

Ultimately, market prices in the housing sector must adjust. That is the only viable solution. And while some families will be forced to become renters, other families will have a chance to purchase a new home at affordable prices. Capitalism is all about winners and losers, and it’s the market that must drive the adjustment, not the government.

Joel likes: Help for Wall Street, not your street

David M. Abromowitz/Center for American Progress

Maybe it is not so mysterious, though, that the Bush administration could simultaneously scold defaulting homeowners for the sin of striving to join the "ownership society" promoted so vigorously by the president until recently, while reversing course to drop all pretense of personal responsibility when a large financial house is at the brink. It seems to be all a question of vision, of who matters in the end in the priorities of an ideology-driven White House.