The bailout runs into a populist backlash - Los Angeles Times
September 24, 2008
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Link to the full LA times piece here through digg: The bailout runs into a populist backlash - Los Angeles Times
This article opens up the pathway for casual readers to educate themselves about real information to what's going on and hopefully lead to the information presented on my first blog post from yesterday found here: Fix to our financial system submitted to Senate Banking Commitee ; please comment & circulate
But there are some serious discussion points needed from the LA times article.
I commend David Lazarus for bringing this important sentiment out through a mainstream media channel and highlighting the group fedupusa.org who have lots of great information and SOLUTIONS to this mess.
However, it is not cool as he applies his personal slant and biases on the issue of the article to sway casual reader.
For example;
Lazarus: "Many people, myself included, have come to grudgingly accept that a massive bailout of the financial sector is necessary to stave off greater calamity, such as a collapse of the global banking industry or a worldwide economic depression. The stakes, by most accounts, are that high."
This sentiment is likely popular due to an uninformed public on the details of the peril (details that are not even offered by main stream media; look up $63 trillion in credit default swaps-"CDS"), but the thought that a massive bailout is necessary is WRONG. many independent funding sources fund many/most projects in the country through community/commercial banks (which join together to participate very large loans), venture capital funds, and private companies (has Buffet's berkshire hathaway seemed like a over-excited kid spending like they're on a toy shopping spree lately?) can provide funding!
Lazarus: "But as the scope of the bailout takes shape, a populist backlash is emerging, with some people concluding that the only fair outcome would be for failed firms to fail."
It's not only about fair outcomes, its about fair SOLUTIONS. avoiding the bailout package in current form will help in preserving a decent economic future for the American taxpayer. To have an economy that can support a job, and to avoid a tax burden that would take awayeth nearly any disposable income that is left by the working class-mainly all of you readers here on digg.
Lazarus: "But as I wrote in Sunday's column, market forces can't always be relied upon to determine winners and losers in the marketplace. In the absence of strong regulation, businesses can and will easily go astray amid their constant search for profit. "
Since when were financial institutions so easily at the whim of market forces? they've been predominantly driving market forces (who controls the federal reserve and business funding in the US?), these institutions are "regulated," and have had excessive leverage but still remained restrictive with caps on such leverage. These instititions and they're regulators conspired to allow two insane things happen; 1) at a time when rates were already low, credit already easy, and housing already skyrocketing-they (the SEC-the regulator) introduced allowing for leverage to be INCREASED from 12:1 up to 30:1 (think, even going to 15:1 would have been massive). and guess what? the institutions took advantage and levered themselves by as much!!! 2) the institutions created a new derivative financial instrument and let it blow up ot unsustainable to proportions - over $63 trillion dollars!!!
CAPpers, please help and add to the discussion here!!!
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