A Bail Out SitRep

So lemme get this straight: Congress had to - just had to dammit - shakedown the US taxpayer for $700Billion or global financial markets would collapse, plunging the world into depression.

A bit like this collapse?

Financial markets continued a fearful spiral Monday as investors focused on the weakened state of the global economy, looking past recent steps by government officials around the world to shore up the financial system.

So lemme get it straight again: the markets are plunging anyway and the American government has dug each American $2300 deeper into the debt hole. To think, some people actually believe that there is no problem that government action will not make worse.

Comments

[Henry94]

I raised an eyebrow when we were assured by the entire media that the upswing in the market was because the bailout was likely to be passed. Now it has been passed and the market is going south. Why? Is it the prospect of an Obama win?

[Ernest Young]

Just what did you expect? - that Big Bro was going to wave his checkbook and all would be well?

'They' knew it wouldn't be so, and so did a few in Congress, and so did most of us ordinary fellas!, but hope lives eternal and yes - the pain is going to be - well - painful!

What the bail-out may have done is to shorten the time it takes to get back to normality, - shall we say three years instead of ten?

Whatever course of action taken, that huge amount of debt will have to be paid for, one way or another.

Watch for the DOW to 'bottom -out' somewhere below 9,000, probably nearer to 8,000, which is where it was in 2002.

As for inflation, well, the only sure thing is that it will happen, after all that is how all that cash is going to be paid off, the Fed will print as much extra money as they can get away with, without actually sinking the economy for good.

As we are continually reminded, this is a global crunch, which is probably as good a sign to buy precious metals, as any.

The pundits all say the same thing, - buy! which may be a good thing, or just the opposite! You'll just have to make up your own mind on that one. I know - all very confusing isn't it, but what did you expect, - advice? I have given you a choice, isn't that enough?

[Patty]

Ernest, I agree the market will go back up. But, I don't think the bailout did anything except prop up bad actors at the taxpayers expense - and expand the size of the Federal Government.

I can't believe Bush stood on his bully pulpit and cried "the skies falling" -- irresponsible fear mongering -- which did nothing for the markets, the nation/world confidence, or even the Presidential race.

Idiot!

I know, I'm Monday morning quarter backing but I'm a little angry about this.

Instead of calling for a Depression, Bush could have blamed the Democrats and the Social Engineering and then, at least we could have a robust discussion about socialism v. capitalism, instead of a default socialist solution, which is not a solution at all.

What crap leadership.

[Monica]

It's so interesting that the market went up when that bill was defeated the first time - yet when it was passed the nosedive started and hasn't let up.

[Ernest Young]

Patty,

I think the approaching election did much to stifle the many cries of who was to blame. Whatever Bush had to say - well what could he say? - he has been there for eight years! and he did have a majority in both houses for much of that time, yet did nothing! So his reticence may have been more defensive than would otherwise have been the case.

Easy enough to blame the war for occupying his full attention, but I suspect that is just an excuse, he was just plain lazy.

Perhaps he was just in awe of the reputations of people like Greenspan, who you may remember, was a legend in his own lunchtime field of expertise, and although warning of 'market exuberance', did little to help reign in that exuberance.

He is keeping a low profile now, isn't he?

Read a very illminating article on the role that AIG played in facilitating the fraud that was at the root of the rapid expansion of debt in the last five years.

Let's hope that the blame and the guilty in all of this are not forgotten and that they will get their just desserts...