The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
So let me get this straight: in order to pay for "loans" to companies that have failed due to naive (at best) business models . . .in order to pay for credit that was in reality unaffordable, we are going to lend more credit that we can't afford as a nation.
The notion that there are companies deemed "too big to fail" boggles me completely. Inherent in the axiom "supply and demand" is that there will be times when demand will falter for various reasons. This is basically how the stock market works: when stocks are in demand their price increases; when there is an abundant supply of a certain stock for sale, its price decreases. Multinational companies dealing with amounts of money equivalent to the GDP of certain nations have known this; it's not a surprise. They just didn't give a damn. So now we're going to bankrupt the country in order to bail out businesses that deserve to fail. Stockholders in those companies should be demanding CEO heads on silver platters; instead, they're clutching their certificates in the hopes of a government dole.
What has happened to capitalism?
It's been announced that:
U.S. federal regulators have approved a radical plan to stabilize Citigroup in a complex arrangement in which the government could soak up tens of billions of dollars in losses at the struggling bank.
The plan calls for the U.S. government to back about $306 billion in loans and securities and to invest about $20 billion directly in the company.
Oh, really.
A farmer friend I know came up to me in the store the other day and made a suggestion. He thinks the government should just forget this bailout crap and write every single American a check for $1 million, which we could then go out and spend like crazy. It would be only a fraction of the $700 billion proposed (oh, wait, make that $1.4 trillion now), because our spending would get the economy going faster than a bat out of hell.
Why do I feel that a farmer is more qualified to run the financial markets than anyone else I've heard so far?
Please, discuss. I'd love to hear some options at this point.
UPDATE: Great news! The hits just keep on comin'!! (note sarcasm)
4 comments:
Wait til Obama takes over... this shit ain't gonna fly no more.
sorry, anonymous, Mr. Obama is leading all of this right behind the others. he's talking about going deeper into debt as part of his solution.
the economy got this way because of the penchant of the Republicans to deregulate everything. they told us it would be great for the country. what it did is make it great for the corporations that ran wild because they weren't watched closely.
greed is the cause of our new socialism that was used as a talkingpoint in the last election against Obama and the Dems. the only problem is it's the corporations getting the socialistic benefits.
see, it's all right to not let the people funding the government - you and me - to have guarantees of healthcare, food, and comfortable lives. it is okay to give the people who made this mess everything they want and more with huge salaries and benefits.
there are a lot of other ways to solve this mess, and i agree that letting them go under is one of them. the government doesn't have to be the point on this.
for example, with the Big 3 automakers, why doesn't the oil industry bail them out? they just saw the largest quarterly profits three times in a row!
this last quarter just Exxon made a profit three-times the $25 million that GM, Ford and Chrysler are asking. who's going to need their oil if the automakers can't build the gas guzzlers they foisted on the U.S. people since they won't be in business?
of course, one of the main arguments will be loss of jobs, if they go under. so? maybe that's what it's going to take to get people mad enough to finally stand up and say NO MORE!
Jamie, I pretty much agree with your point about bailing companies out. And I like the idea about giving everyone $1 million, even if inflation would spiral out of control. But that would be $300 trillion, which is much more than the bailout costs.
Jamie I think you misunderstand the current state of global development. The point of the worlds production currently is to use the first world to consume goods made by the 3rd world in an effort to reduce wealth disparity and improve the average quality of life through out the world. The US was made into a debtor country because it was in the third worlds best interest. Therefore its not so much about keeping everyone employed as it is about keeping everyone spending.
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