Has the economic bailout accomplished anything?
When it became apparent several weeks ago that our economy was in much more serious trouble than the experts first believed, Secretary of the Treasury, Henry Paulson, came to Congress and said he needed $700 billion to fix the problems our economy faced. It was a “need to do it right now” moment and after first losing the vote in the House of Representatives, he finally managed to get his program passed by the House and Senate. As of yesterday, it appears the plan has not accomplished what they said it would do. According to Bloomberg, the Secretary has scrapped his plan to buy troubled assets from banks and has other plans for the rest of the bailout money.
Nov. 12 (Bloomberg) — U.S. Treasury Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.
“Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,” Paulson said today in a speech at the Treasury in Washington. “This is creating a heavy burden on the American people and reducing the number of jobs in our economy.”
His remarks are an acknowledgement that the pitch he made to Congress for the bailout hasn’t delivered what was promised. Paulson sold the Troubled Asset Relief Program as a way to rid bank balance sheets of illiquid mortgage assets, and he may encounter resistance from Congress for the remaining $350 billion after using most of the first half to buy bank stakes.
I have to agree with Bloomberg. As citizens of the United States, we were told this plan was absolutely necessary, that without it, Wall Street and our economy would collapse. While we were being told this, Mike Huckabee and other fiscal conservatives continued to say it was a very bad idea to spend the money to bailout Wall Street. (You can read Huckabee’s original remarks in a previous article.) Paulson has said he has used all but $60 billion of the first half of the money allocated by Congress to buy equity stakes in banks and in AIG. I have a couple of questions for Henry Paulson and Congress. Is our economy any stronger for spending nearly $350 billion to buy up stock in troubled banks? Is Wall Street any better off for the money spent? I may not be an economist, but I would have to say the answer to both questions is no.
As of yesterday, Wall Street was down another 357 points to 8,280 and with no sign of improvement. More and more bad news keeps coming in and it gives the impression we are throwing money down a rat hole. Now, we have Barney Frank exploring the wonderful idea of giving money to General Motors, Ford Motor Company, and Chrysler. Admittedly, the money he wants them to receive is part of the original $700 billion bailout plan, but let me make a guess as to what is going to happen. Between Congress and Secretary Paulson, the $700 billion is going to be spent on various efforts to revive our economy and nothing is going to change. We will then hear a cry of “this didn’t work but give us several billion more and it will surely work”. (Sarcasm fully intended.) I wonder who they intend to bail out next?
That’s my take!
Larry
It looks like we will continue to bail out everyone that comes along until we reach the $2 Trillion mark. Then politicians will squirm until we reach $3-4 Trillion. By then the market will be down to 6000 and there will be a worldwide depression.
Now for the bad news…
I wish we would hear more from those supporting the FairTax right now… they need to start talking about how the Fairtax (and lower spending) will help the economic situation…
We also need to stop the bailouts… I know this will sound harsh, but these comapnaies simply need to fail (or at least find an option on their own to survive)… it will be tough in the short-term, but much better in the long run.
Tam,
Yes, the bailouts have to stop. Our country can not continue to bear up under this much debt. The company I work for is making adjustments and so far, has not laid a single employee off, although all of our hours have been cut back. That’s what responsible companies do.
I agree with you on the FairTax. It needs to be looked at closely, because it would help ordinary citizens. With Obama set to take office, that is not a likely option. I don’t see him or a strongly Democratic Congress giving it a snowball’s chance.
Larry, by now we can see more clearly what you wrote way back in November. I don’t see the results trillions of dollars should have bought. IMHO, many of those we bailed out should have gone bankrupt, renegotiated their union contracts and rebuilt from the mess they’ve created.
There’s still plenty of blame to go around, but I believe the onus is on our government; they have steadily gotten us into more and more debt.
No more bailouts and do away with the IRS while we’re at it. That’s just legalized theft!
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Pastor Ron,
You are absolutely right. We have seen virtually no results for the amount of money they have been spending and in fact, they really haven’t been very forthcoming in how they are spending the money.