Long Live the Credit Bubble
Today Bush announced plans to essentially bail out irresponsible lenders, developers, borrowers, brokers, basically anyone involved with the subprime mortgage mess, as this news release outlines.
There are a number of responses, critical as in Mish's post, and I do think Mish is right on with his analysis.
I am not sure what to make of "Parting the Bankrupt Sea." He points out that those hurt by this move are those who correctly assessed that these were bad investments and there would be a crash. I simply don't get the part of this post that says:
This is a good move by our government (unless Bush does something really odd during his speech later today or Bernanke usurps President Moses Bush with comments that are at less than positive and supportive)
I don't see at all how it can be a good move to bail out highly irresponsible activities. Governments role is to regulate highly irresponsible activities, not dip into taxpayer's pockets to make irresponsible activities ok. At best, it is a short term solution that allows the wealth to cut their losses.
Another post, just a graph
, shows the degree to which US debt has risen relative to that which makes a nation strong. The graph screams to me the degree to which today's promise is short term, unsustainable and further cannibalizes the future.