Bailouts Defeat Purpose of Capitalism

The United States government is using bailouts as a reason to control economics. This decision has pros and cons. Most Americans do not understand what bailouts mean.

The government bail-out of American International Group, Inc, also known as AIG, has taxpayers questioning the purpose of a bail-out. I was so confused that I contacted a financial advisor to get his opinion on things.

Jim Raue from Gold Key Financial Services is a CFEd. In english terms, he is a financial advisor and educator.

"The problem I have with the government bail-out of AIG is with the U.S. government becoming overly involved in the private sector. It defeats the purpose of capitalism. If the loan goes through, then the U.S. government is a 79 percent share-holder," Raue told NewsOXY.

Raue went on to explain that the government will decide how AIG is to be run and even how the risk-takers of the company are to be compensated. When has the government ever been successful in any capitalistic venture? When has the government even been able to control spending of our tax dollars? If you take a look at social security, you will understand the fear that I have with the government controlling interest in a company.

It does appear as if the media rushed to judgment and then investors panicked and now politicians are having a field day deciding just how they will run this company. Raue also told me that in the long run, this is worse for the market and for the country as a whole.

Golden parachutes for CEOs after a government bailout is something else that has taxpayers angry. Why should these CEOs make money for their driving a company into the ground? This is an outrage. A taxpayer would simply lose their job. I highly doubt they would get a bonus.