The Bailout is NONSENSE!!!!!
The issue is that revenues are evaporating. I have been warning you about this for months. Our politicans have the problem bass ackwards. Banks are not making loans not because they don't have liquidity.....it is because they are few qualified or wanting to borrow money.
In the past few years...the vast majority of bank loans came from writing toxic mortgages, HELOCs, agressive commercial RE loans, and highly leveraged private equity deals. "Legitimate and sound" lending was a relatively small portion of bank business. This toxic business is now dead and the banks want of to take the dead weight off their books after booking huge profits and taking home enormous bonuses.
Some how our politicans are trying to make us believe that if the bad loans are removed from the books of banks....that banks will be ready to make more bad loans??? Is that like trying to cure a hangover with liquor???? How stupid does Paulson think CAPS players are????
Further, by borrowing more money the FED will cause interest rates to rise by weakening the dollar. When people become worried about a borrowers ability to repay....the rates they demand skyrocket....just take a look at this from the WSJ:
Debt investors are nervous lately. Borrowing is expensive and hard for cities, states, hospitals and turnpikes nationwide. Such extra costs will likely be met by raising taxes in coming months.
Get ready...because cities and states borrowed so much money in recent years.....with the current sharp decline in revenues it is getting much harder and more expensive to raise cash......so they are coming after you and I to make up the difference.
The same will happen to the Federal Government after borrowing an additional $700 Billion and taking on the liabilities of Fannie and Freddie. As foreigners shift to currencies of countries with more fiscally conservative policies...the borrowing costs to America will rise as dollars are dumped. Since few banks are paying taxes any more....that's right.....you and I will be making up the difference.
Here is the rub...as we are forced to pay more taxes...that will be less money to spend and further contraction for an economy already breaking to a halt. In essense...the banking bailout is an economic and a personal tax sucking machine.
What few want to admit right now is that all of the growth America experienced since 9-11...was simply gained as a result of creating credit and accumulating debt. As long as the banks lent.....things went along just fine. When the banks ran out of money......just like a plane running out of gas......the economy started heading for the ground.
Right now there is simply too much debt in every crevice our our economy.....borrowing more money will not solve the problem and actually make things worse. If this bill passes...get ready for huge tax hikes and a slowing economy.
We just loaned the auto companies $25 Billion....if they can't pay the current debt load...how can adding additional burdens in a slowing sales environment help???? It can't!!!!!
Our leaders are committing economic treason against ourselves and children....it is time for the citizens to stand up and kick the foxes out of the hen house. It is time to restructure....NOW!!!!