Explanations Wanted
Posted by Jeff Pruitt - 10/3/08 @ 10:39 pm - Filed Under National Politics
I’m not being facetious here. I would seriously like for somebody to explain to me how this bailout will solve our current crisis. Don’t bother rehashing the problem - I get that; I understand the credit crunch.
But I would like to hear a good explanation on how this will actually solve that problem…
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8 Responses to “Explanations Wanted”
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You can’t find a good explanation because there isn’t one. There’s a reason everyone who “supports” the plan qualifies it with a “I wish we didn’t have to do this.” type statement.
There is no solution with the $700 thousand, Million = $700 Billion passed bill. It’s Fraud!!! We will see the National /Global markets do what they will with all our money.
We will need to bite the bullet and down size every expectation in the USA. In fact, we are in a recovery mode. It’s going to take time.
What do your readers think?
In the long term, I am a firm believer everything will work out… in the short term it will be a rocky road for people/states/ nations that are unstable. Yes, we as a Nation will survive. And we will kick every asshole out of Congress, House,
and the Senate.
I truley believe, the $700 Billion Rescue plan was
not for Mainstreet or Wall-Street, but a call-in
from World Markets. It’s all about you owe so pay up or we will slit your bottom line.
Let me start by stating that I am no fan of the current bailout. I didn’t like it in the beginning and I don’t like it with the added pork.
That said, it could temporarily reinflate the credit bubble. The government will inevitably over pay for bad assets thus increasing the liquid assets on the bank’s balance sheets. With the recent bailout in mind banks will begin loaning again with loose credit standards - this is a perfect example of moral hazard! Banks are not in the business of holding cash just for the sake of holding it - they will loan these new dollars out.
This could hold things off for 12 - 18 months if everything works perfectly. The end result will be the same just delayed, and with the added bonus of the taxpayers holding the most worthless assets our treasury department could find.
This is socialist, inflationary, and treasonous. May those who voted for it find themselves in the unemployed.
Brad
Jeff,
I certainly do not think it will work. Here is what I think will happen in general terms:
First I think that the Treasury Department will form a small group and will outsource management of 700 billion dollars to asset management firms; many of which caused the problem in the first place.
Next the Department of the Treasury will pay fees of about 1% per year of assets managed. If the program runs for two years this will mean the taxpayers will pay 14 billion dollars in fees to these money management firms; many of which created the problem.
The core issue is how much will these asset management companies pay for the “risky assets” no one else wants. My guess is they will pay ABOUT 50 cents on the dollar. These asset management firms and the Department of the Treasury are going to be under a lot of pressure from lobbyists supporting our financial institutions… The NOvember election will be over and the taxpayers will be forgotten.
Next the banks will write off their losses and move forward.
Last, but not least, is what will the banks due with the infusion of almost 700 billion dollars. Those who support the bailout plan hope that banks will go out and loan money to people just like they did one year ago, in other words to poeple with bad credit. I do not think that will happen with most of the banks. I think most banks will tighten their lending standards and keep the cash to bolster their reserves.
In fact I think that Fannie Mae and Freddie Mac are the only two large orgnaizations that will keep lending money like they did two years ago. They will do this because they are the government and can steal as much money from the taxpayers as they want to.
This is a terribel bill and I will NEVER support any politician who voted in favor of it.
Mike Sylvester
Jeff:
Lets just say it’s the LARGEST BAND-AID to EVER go onto a HUGE compound fracture…
And it ain’t gonna be pretty.
:(
B.G.
How does it correct the bad behavior on multiple individuals and groups parts? It doesn’t. And that’s what concerns me.
Jeff,
I oppose the bailout. But with a crisis, real or perceived, there is often an impulse to do “something”. Nothing damage a politician’s reputation more than doing nothing.
Let’s say you have the flu. You could just get some rest and drink lots of fluids, or you could spend $150 on a visit to the doctor. Some people take things a step further and insist that the doctor prescribe an antibiotic, which is useless against a viral infection but at least it’s “something”.
Instead, the best thing to do is figure out what caused the crisis in the first place, fix that, and let the economy get better on it’s own.
Well, we’re already seeing the lack of results from this bailout.
“Investors are realizing the Bush administration’s $700 billion rescue plan won’t work quickly enough to unfreeze the credit markets, and that many banks are still having difficulties gaining access to cash. …..”
World markets are diving - the opposite expected. WE all knew that spending more money would not solve this problem. Yet, people like Mark Souder don’t listen to his voters - just those that will benefit from this (the large, failing banks)
And we must be even more careful in the future. Capitalism works when you have many competing entities and further consolidation will only put us at more risk.
DaveC