Over the last year home builders have taken huge losses. Now Congress announces a bill that will help home builders by providing them "tax credits" & "rebates" to basically bail them out and help some of them from going bankrupt. Interesting enough, earlier this year when this bill was not included in the Economic Stimulus package, the National Association of Home Builders were not very happy, and said it would stop making contributions to congressional candidates "until further notice".
Please read the full article here Home Builders Get Break From Congress
My opinion:
The homebuilders should not be getting tax rebates/breaks, period. All businesses are subject to gains and losses. You didn't hear the homebuilders complaining when raking in billions of dollars. But now that they overbought, overbuilt, and their investment is not as good as it was a few years back, they want help. Maybe they should have scaled back. Didn't the management know about this thing called "overexpansion"? Instead they kept purchasing land and building homes at the top of the market. The Congress shouldn't bail the home builders out. If they go bankrupt, they go bankrupt. That is the name of the game. Bankruptcy exists for a reason. Companies prosper and they fail. How about all the other businesses that have seen steady declines due to the downturn in housing? Should Home Depot or a furniture retailer seek help from Congress because their business is not thriving like it was a few years ago and now they may be taking losses on their balance sheets? If you or a family member have a small business which was once prosperous and has taken a turn for the worst, do you think the government is going to bail your small business out and keep you from going bankrupt? No. These sorts of actions by the government disrupt the free markets.
I would like to hear other opinions on this issue.
Joe
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