The more I look at this proposed bail-out, the more it stinks. Paulson and Bernanke have bought into this whole Bush Administration garbage of tolerating failure without consequences. We, the hard-working taxpayers who pay our taxes and pay our mortgages have to pick up the tab for EVERYBODY who was supposed to be looking out for us. And didn't.
Amazingly, Paulson's plan does not provide for increased oversight and regulation. That is supposed to come AFTER the bailout is in place. Which, btw is NOT guaranteed to work. Its primary purpose is supposed to be to restore "confidence" in the very institutions that screwed up so badly in the first place. While it would really be little more than symbolic (and of little actual practical value ) it is galling that the very greedy grubbers get to keep their big fat bonuses and golden parachutes because Paulson says the "bail-out" should not be "punitive". Why Not ? Why on earth are we REWARDING bad decision making ? Worst of all, there is talk that this bailout agency will be buying these lousy mortgages at par instead of 20 cents on the dollar. Wtf is that about ?
Let's assume arguendo, there is no bailout. What's the alternative ? A recession. A bad one. Perhaps a severe one. We've had too many sick plants in the economic garden for too long and instead of pulling them out or letting them die; we've been feeding them. ENOUGH ! Let them go belly up and we can rebuild from the ground up. Other countries have had to do it . Why not us ? Yes it will be painful and unpleasant. But this is actually an opportunity to set our entire economic house in order once and for all.
BANKS WILL FAIL - A lot of them failed in the early 1930's and late 80's. We're still here.
THE DOLLAR WILL TUMBLE- Other currencies have collapsed and then come back stronger than ever once their issuing countries had a good sound economic house-cleaning.
UNEMPLOYMENT WILL RISE- What a GREAT opportunity to round up and kick out a few million illegal immigrants so their jobs can be taken by LEGAL Americans.
STATE & LOCAL GOVERNMENTS WILL FAIL- Talk about your silver linings !! The greatest errors of the 70's were bailing out NYC and Chrysler. A good economist worried at the time NOT that the Chrysler and NYC bailouts would fail but that they would work and he was right because horrible precedents were set. Btw, his name was Alan Greenspan. Both should have been permitted to go bankrupt.
Another opportunity to clean out a lot of dead wood and tear up a lot of sweetheart contracts. Maybe California, NYS and NJ could FINALLY be put on sound financial and fiscal footings. If they and other entities are unable to borrow money for a few years, what is wrong with that ? Let the lenders and bondholders get on line and get paid off in line within FDIC guidelines - $100,000 per person.
Starved for money, all governments would have to carefully pick and choose what to spend on. Nothing promotes limited government better than a lack of funds.







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