29 September 2008

Whatever Happens Next...?

If the economic situation wasn't so serious you could be forgiven (if you live in the US) for thinking you were in the middle of a bad soap opera or comedy.
The problem is it isn't amusing in the slightest. This temporary pause in the bail-out plans is just that - temporary. A bail-out of some kind will be pushed through. The Federal Reserve and associated cronies will not be blamed for the economic catastrophe the US is currently facing.

A few concerned economists are raising their voices in horror at the bare-faced codswallop being used to justify the theft of tax-payers money on a 'project' which will not work. Once this plan has been approved it is speculated that by the end of the year the situation would become 'perilous' all over again.

This is a prime example of the benefits of deferred gratification - go through any necessary pain now for gains later, not the other way round. The 'Buy Now, Pay Later' mentality is how the country has found it self in the situation it is in now.

People need to move into a different mindset: if you can't afford it now, then save for it. I know some people are saying that businesses need credit and there is currently a log-jam in the systems that could affect jobs, etc. My question is: Why create jobs based on instability? Once the markets crash they will sort themselves out. A level will be found which will be more inclusive and based on real products rather than candyfloss, paper money with nothing to support or back it up and hype.
We will see how things pan out over the next few days, but it seems People Power has reared its head a little - enough to cause the criminal fraternity to pause and regroup.
Interesting times, indeed.


Samuel Skinner said...

Nationalize the suckers. Sure, state run businesses have problems with bailouts, motivation and corruption... but it is pretty obvious that these firms had the same problems.

Not going tohappen, but any flaws in my hope?

Samuel Skinner said...

I just looked- that is what the Fed did with Fanny Mae... so it is possible. It won't solve the crisis, but it should help keep it from repeating.

philip said...

Great post as usual. I think we need to let the Dow bottom-out at 8000. And then regroup and work at making the USA great again.

We've got to quit letting idiots and assholes run our country. It was very encouraging to see that the first bail-out plan did not pass. It did not allow for the punishment of those that got us into this mess. And, some congressmen/women are saying that they will not vote yes unless that happens.

Also, this has given folks some time to consider alternatives to a 700 billion bail-out.

Matthew S. Urdan said...

Whatever happens next is that we're screwed for a very long time. This 700B crisis is just the tip of the iceberg. If such a bailout is approved, you and I will live the rest of our lives and this will never be repaid. Not only that, it sets the stage for future bailouts for everything. Everything. The taxpayers will be on the hook for every screw up big business ever makes.

This is so wrong.

If there is no bailout, yes, there will be a credit crunch. Yes, there will be a recession, maybe even a depression. Yes we'll lose our 401ks. But you know what? I rather bite the bullet now and end this and let all these banks and insurance companies and everyone else fail then having the crooks on wall street get away with this and then find out this was only the tip of the iceberg.

Just like planes lining up to takeoff at Hartsfield or Ohare airports, there are mortgages in line to balloon or have their aprs adjusted upward that will trigger a whole new financial crisis.

The solution has got to be finding a way to give the foreclosures refinancing that allows them to stay in their homes and continue to make payments.

Bailing out business for taking on bad debt and then selling it and speculating on it is not the way to go.

given the choice of taking bitter medicine and making an irreversible turn towards socialism, I say take the bitter pill. Let the bad banks and businesses fail. Let the good banks that operate with integrity rise above this.

We can not afford the cost to society of a bailout--as hard as the alternative will be.