Marketwatch has a nice article today highlighting thirteen reasons why Bush’s bailout plan won’t stop a recession.
Like the tide, recessions are natural, healthy, positive … and inevitable
Fortune magazine recently put CEOs such as Citi’s Prince and Merrill’s O’Neill under the microscope: “What Were They Smoking?” The best-and-brightest lost $165 billion, but exited rich, with hundreds of millions.
Now we need to ask guys like Paulson, Bernanke and their Beltway buddies: “What are you guys still smoking?” Bailout? Freeze? Voluntary? They must be smoking hundred dollar bills from lobbyists because this government intervention scheme smells bad.
It’s not what they were smoking, it’s what they were drinking. (If you want to drink some too, you can buy through Amazon by clicking the link at the top of the left column).
Why? Because all these solutions are being dreamed up by the same political and financial geniuses who got us into the problems in the first place. The same guys who failed to act before the economy spun out of control. Trusting those same guys makes absolutely no sense! They were clueless going in. They’re clueless about the solutions. So, a new rule: “What do you call a politician with a prediction? Wrong!”
Though you may disagree with Dick Cheney, this time he’s the only guy inside the Beltway who’s got it right. Fortune says “the staunchly free-market Vice President can be expected to resist any impulse to soften the blow with government action.” His position: “The markets work, and they are working.”
Good old Dick just might be right on this one. The markets work, so let them be.
Wait, so government intervention is bad? How can one say that government control over free market is bad?
Thats right, a government controlled (persuaded) free market isn’t a free market at all. Maybe Bush should listen to Chavez for solutions to economic troubles. Make major industries state controlled.
Enough sarcasm. ‘Helping’ the economy by stepping into private business matters is irresponsible. Easing a credit crisis with easier access to money and lowering the federal fund rate only make our dollar stretch thinner. Yes, maybe spending will increase with an influx of currency at lower rates, but this only supports inflation. Has everyone forgot about the importance of SAVING?
Businesses love 2 things… Profit & Growth. Every one in business strives to make a profit and grow each year. The reality is that nothing is infinite. The economy as a whole can not keep growing and growing, especially when most Americans have substantial debt and have to pay more for increasing cost of living. Something has to change. Either everyone must change their lifestyles and save more and live modestly, or the country must somehow increase wages and jobs dramatically (and not just 100,000 new jobs paying $7/hour). Allowing people to borrow more money to save falling markets does not fix the problem of too much credit.
Our economy is borderline misleading. If a company increases sales on credit, on paper the company shows growth. However all that money sitting in the accounts receivable kills cash flow. The credit card companies are the big villains here. I think a loan shark would give you better rates, but then again the CC companies won’t break your thumbs, they will just break your wallet.
On top of that, the terms for the bad loans that were sold to investors (both at home and abroad) are being arbitrarily changed. That’s a huge cut to the credibility of these investments, and to the credibility of the US financial system. What incentive is there now for someone to invest in a product when the terms may suddenly change at the interested party’s discretion?