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Long Live the Credit Bubble



August 31, 2007 – Comments (3)

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.

3 Comments – Post Your Own

#1) On August 31, 2007 at 4:34 PM, floridabuilder2 (97.87) wrote:

i didn't even know there was a credit crisis until bush came out this morning and walked me through the issues... and saddam thought bush was an idiot. lmao

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#2) On August 31, 2007 at 9:07 PM, infoLust (24.49) wrote:

the tax payer burden would be greater if we allow the free market to take its course.  In a certain sense housing should be considered a mutualized concern.  Likewise for education.  The free market can be more tyranous and destructive than an a-bomb.  The free market got us into this mess in the first place, though one could also argue that the fed monkey wrenching the interest rate was the one of the root causes too.  But all the Fed did was make low interest rates available, it was the free market that decided to  exploit it.

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#3) On September 02, 2007 at 4:25 PM, dwot (28.99) wrote:

floridabuilder, thanks for stopping by.  I checked out your blogs and they are exceptional.

infolust, the free market ought to be legislated and what has happened ought to have been against the law, however, I don't think I understand what you mean that housing should be a mutualized concern, but I don't think I agree with what I think you mean.  

On the free-market thing, I think it is totally garbage that the free market should be in control.  The free-market consistently results in avoidance of responsibility for spill-over costs and consistently rewards highly unethical self-interest at huge expense of the greater good. 

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