The House of Representatives will be voting on a "sweeter" bailout plan later today. I still have mixed feelings about this piece of legislation. Our elected officials, in their zeal to do something, do anything, are still running around like chickens with their heads cut off to get something done.
I still haven't heard anything specific about what bad things are going to happen. We are being fed vague threats about "millions of jobs lost" and "a severe economic downturn" and "YOUR bank could fail." One of the ones that I have heard in the last few days is that consumers may not be able to get car loans. Are we really being threatened by the economy, or just being held hostage by financial powerhouses on Wall Street? The banks are telling us that they can't extend us credit unless we give them huge amounts of money.
The underlying cause of this whole mess is that too-easy credit was being extended to people that can't pay it back. Now we propose pumping billions of dollars into the banking system so that the credit market can again start offering credit to businesses and people. It seems that we are just going to be perpetuating the problem. If lax credit terms were what got us into this mess, then maybe tightening credit is a necessary outcome of this crisis.
The recent plunges and rebounds of the stock market are making people jittery. Everyone seems to agree that this is because of the collapse of the housing bubble. Now that credit is being withheld, people can't buy houses and house prices are falling. Housing prices have been rising at an artificially high rate due to the amount of money that has been made available to borrowers. The market is readjusting to more realistic housing prices.
The painful reality of peoples houses becoming worth less than they were purchased for is also being used against the American people. President Bush, in an address to the nation yesterday, threatened Americans that they would lose equity in their homes. Again, the proposal is to pump billions of dollars into the credit market to allow easing of lending standards which will artificially prop up housing prices, perpetuating the housing bubble.
This is a painful time and comparisons have been made to Japans "stagflation" that lasted several years. We may be heading towards that. Is the answer really to let our government spend billions or maybe even in excess of a trillion dollars to support a bubble? All we are going to do is devalue the American dollar further and delay the inevitable market adjustments.
Banks will get back in the business of lending money. That's what banks do. Will their standards for lending be higher? Yes. Is that a bad thing? I don't think so, especially since easy credit is what got us here in the first place.
In any case, our politicians are proposing a huge bailout without doing any real homework and without studying the problem and without truly informing the public how our money is being used. They think the American people are too stupid to really understand the problem, so we are again being fed the line "Trust us...we know whats best for you." Too bad they have abused that trust so many times in the past and Americans no longer feel confidence in our elected officials. Does anybody else think that our elected officials are being overly hasty in their rush to force the Americans taxpayers to bail out big business?
I still haven't heard anything specific about what bad things are going to happen. We are being fed vague threats about "millions of jobs lost" and "a severe economic downturn" and "YOUR bank could fail." One of the ones that I have heard in the last few days is that consumers may not be able to get car loans. Are we really being threatened by the economy, or just being held hostage by financial powerhouses on Wall Street? The banks are telling us that they can't extend us credit unless we give them huge amounts of money.
The underlying cause of this whole mess is that too-easy credit was being extended to people that can't pay it back. Now we propose pumping billions of dollars into the banking system so that the credit market can again start offering credit to businesses and people. It seems that we are just going to be perpetuating the problem. If lax credit terms were what got us into this mess, then maybe tightening credit is a necessary outcome of this crisis.
The recent plunges and rebounds of the stock market are making people jittery. Everyone seems to agree that this is because of the collapse of the housing bubble. Now that credit is being withheld, people can't buy houses and house prices are falling. Housing prices have been rising at an artificially high rate due to the amount of money that has been made available to borrowers. The market is readjusting to more realistic housing prices.
The painful reality of peoples houses becoming worth less than they were purchased for is also being used against the American people. President Bush, in an address to the nation yesterday, threatened Americans that they would lose equity in their homes. Again, the proposal is to pump billions of dollars into the credit market to allow easing of lending standards which will artificially prop up housing prices, perpetuating the housing bubble.
This is a painful time and comparisons have been made to Japans "stagflation" that lasted several years. We may be heading towards that. Is the answer really to let our government spend billions or maybe even in excess of a trillion dollars to support a bubble? All we are going to do is devalue the American dollar further and delay the inevitable market adjustments.
Banks will get back in the business of lending money. That's what banks do. Will their standards for lending be higher? Yes. Is that a bad thing? I don't think so, especially since easy credit is what got us here in the first place.
In any case, our politicians are proposing a huge bailout without doing any real homework and without studying the problem and without truly informing the public how our money is being used. They think the American people are too stupid to really understand the problem, so we are again being fed the line "Trust us...we know whats best for you." Too bad they have abused that trust so many times in the past and Americans no longer feel confidence in our elected officials. Does anybody else think that our elected officials are being overly hasty in their rush to force the Americans taxpayers to bail out big business?
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