Growing, growing, gone
The healthy economy as we once knew it has now been eighty-sixed in favor of the massive TARP bailout, and all of its equally expensive pals. It seems our government and the media just can't stand only 94 percent of the American population working, only 94 percent of American households still solvent, and a much needed credit market correction. Our bubble has finally burst. One would think that since our elected leaders had for years warned us about the ills of “easy credit,” that a simple, albeit large, banking and credit industry correction would be welcome. But now they've changed their minds. “We need to free up the credit markets,” we hear. Every day there are more cries of “it's a crisis;” “do something.” So the once evil and toxic “easy credit” has now become their much sought cure.
Please. Anything.
Well, they did something. They have now agreed to back up 8.5 trillion dollars worth of bad debt, or about 60 percent of the entire GDP of the United States ('07), and hand it all over to the largest industries in the country. Can you say “transfer of wealth” boys and girls? I think you can. But we have to ask...Why are they doing this? My answer? Votes and fear.
Credit Crisis?
Although it may be a little more difficult for you to get a home loan, it's not impossible. You can still get these loans, though your down payment will have to be larger, and your credit history will need to be healthy. Ironically this is exactly what the banking sector required from all of its loan customers, before the government began pushing its home-as-American-birthright agenda through Freddie and Fannie. Strange isn't it? Historically, our situation was exactly what we're looking for today. Higher credit requirements. Less regulation. Less risk. Healthy banking industry. Who knew? Well...we did. But the Washington insiders didn't.
Auto loans are even better. Automakers are desperate to sell cars right now. No money down deals are advertised daily. So no credit crisis there.
Credit cards? Yes, we have more credit cards in the U.S. than we have people, but we've chosen not to use them in favor of...gasp, savings! Thrift, economy and savings, oh my! This is supposed to be bad?
Votes And Fear
They're saying that they're afraid if they don't move rapidly to get the (credit) markets moving again that there will be layoffs, a spike in unemployment, and those will lead to a dissatisfied electorate. And when the next round of elections takes place, all of the dissatisfied peoples will be revealed. But ultimately they're only guessing about the magnitude of future unemployment. They have no empirical evidence upon which to place their fears. We are in totally uncharted waters.
So in their infinite wisdom of how to correct an “out of control,” uh, free marketplace, they've done something hideous. They've distorted more than half of the economy. They've twisted our productive effort up to the top of the corporate ladder. They've created the largest corporate welfare program this country has ever seen. I have to wonder how many in the working/voting classes see this as equally dissatisfying. But their fear is an emotion, and not logical, after all. They just want to protect their future votes. And do something.
Follow My Lead
So again, the American people are left to pay for the emotions of fear-filled bureaucrats. They've placed an 8 trillion dollar bet on our future. And their jobs. Our elected leaders are telling us to do as they do. Use your credit. They're hoping that if they spend 8 trillion now, that we will produce more than 8 trillion later.
Honestly, though, I have my doubts. Chase Bank just burned through its first 25 billion dollar TARP payment (which they used to buy new assets). Now it's back for another 20 billion, and over 300 billion in loan guarantees – which they've been given. The auto industry guarantees doubled from 25 to 50 billion. All of it without a plan. It's only a matter of time before we see more of this behavior from other TARP-filled corporations.
So use your cards, people. Use your cards. The government wants to stimulate the economy and take credit for its new, larger welfare program. They just neglected to tell us what kind of welfare.
And one parting question...does any of this seem like a "representative" government to you?
Here are a couple of sites dedicated to tracking how much the bailout is costing us.
http://www.breakthebailout.com/node/3
http://www.ritholtz.com/blog/2008/11/tracking-the-bailout/
Here is a site that compiles a lot of information on the bailout and all of its minutiae.
Here is some good Citigroup info.
Here is the Citigroup bailout in detail.
This is a “Bailout Reader” page.
http://www.youtube.com/watch?v=nlcOJz9vb_E
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