Government to the Rescue?
Last week was a tumultuous one; a financial roller coaster ride filled with government bail-outs and promises of more of our tax money going to Corporate America. Nightmares of disappearing 401Ks, IRAs, and other investments consume many of our daily thoughts.
Just when it looked like a downhill slide, the clouds parted and our prayers seem to have been answered. The Dow Jones rocketed up 400 points only after reports were leaked that the Treasury Secretary Henry Paulson is considering a long-term solution similar to one utilized in the late 1980’s- early 1990’s for the savings and loan crisis.
This plan is potentially looking to create an independent agency (similar to the Resolution Trust Corporation) to take over the bad debt from these failing banks.
Don’t get me wrong, this apparently solved the financial pitfalls in the past. I am a huge supporter of bringing back a booming economy. But does anyone else feel like this is a fancy name for “DO OVER”? WHITE-OUT? BACKSPACE?
If I’ve got it wrong, please don’t be shy! Share the scintillating details with us of how the government taking over further debt from additional investment fortunes will save our economy.
General
Reader Comments (1)
As unfortunate as I believe this liquidity crisis to be, it has many positive benefits for young, prudent Americans.
Let me be brief, who really caused this economic meltdown? Was it the greedy Wall Street trader, the current Satan of the markets? Or, was it the greedy Main Street American who took out a loan, which he/she could not afford? The answer probably lies somewhere in between.
We need Uncle Sam, as much as this upsets my fiscally conservative attitudes. I admire Ben Bernanke, because without the money he is flooding into the inter-bank loan system, companies will not be able to pay their bills, which includes their payroll. Payroll is vital means by which you and I, or Main Street, make our living wage.
I find it ironic that Main Street complains about the leveraging issues that destroyed Lehman Brothers, and forced the Government to nationalize Bear Stearns. Lehman’s was leveraged at a 30 to 1 ratio, or for every dollar of assets they had 30 dollars of debt. But, how many Americans have a leverage ratio to our favor? The average American has 9 credit cards. Humm?
I currently work in Maine, where home heating oil prices are through the roof. The people of Maine have called on Augusta to give tax credits for the purchase of home heating oil. What I find disturbing is that when I walk into the parking lot of the company I’m working in, there are brand new pick-up trucks, Jeeps, and even a few Cadillac’s.
We are a nation of spenders. We grew up in an era that, “If you can’t get it, put it on credit!” We have grown so accustomed to living beyond our means that we now view this lifestyle as a right, synonymous to Freedom of Speech.
However, penny pinchers and save-thrift Americans have much to gain from this situation. Stock is cheap, dirt cheap. Those of us who have been prudent and frugal stand to do very well in the next decade. Which side are you on?