It’s Not a Bailout

The financial crisis that we’re currently facing needs to be dealt with. It’s only going to get worst the longer we wait to take the necessary actions to contain this problem.

The thing I hate the most about what is currently going on is that everyone keeps calling it a “Bailout Package”. This is not a “Bailout”. There is something fundamentally wrong with our financial system that needs to be fixed. This is an Investment in America! Using the taxpayers money the government will be buying troubled assets that will make a return, that doesn’t sound like a bailout. Bill Gross from Pimco has even done the numbers which came out to 7-8% return for these assets, watch this video of Bill Gross on CNBC.

I’m all for free markets, but under the circumstances that we’re in from a plethora of actions taken in the past, intervention is absolutely necessary. I think it’s healthy to have contraction during an economic slow down when businesses fail or get bought out. This is survival of the fittest, but when you have only 2 investment banks left that may go under is a red flag that there is something wrong and action needs to be taken.

The “Investment in America Bill” did not pass the first time around in the House of Representatives and Dow Industrial Index spiraled down 770pts. It took a drop like that for people to think twice as the markets dwindled down through the rest of the week. Maybe if the media didn’t call it a bailout for Wall Street more people would understand that there was a problem that needed to be fixed.

The problem is that the credit markets are frozen right now. Financial institutions need the capital to start making money again. If we don’t do anything with the credit markets, things will only get worse. Banks can’t afford to lend money, then they can’t make money. No lending means people can’t borrow money for housing or cars. That means the housing market will continue it’s downward trend along with other industries. The economy will come to a halt and we’ll head into a recession, unemployment will increase and consumer confidence will be shattered. We’ve been in bad times in the recent past but we’ve always had credit to keep things going. Without credit you can see the chain of events that will lead us into a depression.

This really does suck. I’ve lost money myself along with many others, but how about those they are nearing retirement. They may have lost a good percentage of their funds as it looks like there weren’t many safe havens in the market, even in checking or savings accounts. Failure to act under the circumstances has probably cut the wealth of many individuals.

We can’t be playing the blame game cause it’s a combination of greedy lenders and overly optimistic borrowers taking on debt that doesn’t make sense with other factors that have gotten us into this mess. We can’t be harping on how we got to this point but instigate a solution to get out of it and learn from our mistakes. I hope it isn’t too late but there is an upside to the delay of the bill. There is probably more benefits to the taxpayers and they deserve it and I agree that there needs to be oversight of this government entity, CEO compensation regulation, and the taxpayer has to make out.

IT’S NOT A BAILOUT
IT’S AN INVESTMENT IN AMERICA