Lumuhuku

Arbitary Obsessionist's Blog : Ambition is redundant. In life, mission is everything.

700 Billion Dollars Bailout Rejected. Fortunately…

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Wall Street thought that the bailout being rejected, was bad. Really bad. Dow tanked 777 points in a single session. The biggest loss ever in a day. Even President Bush was very disappointed.

rejectedI am not. This gives Americans another chance to have a look at the bailouts. Take a look at what is wrong with their system and bailouts. I have always advocated that it is better for the markets and the ‘stupid’ organizations to correct themselves. Only when these idiots pay for their mistakes, will other better organizations rise to take their place. Even though the bailout plan promised relief in the short term, its sustainability over the long term can be seriously questioned.

 

So why actually did the votes did not come in motions favor?

The bill went down 228-205.

The reasons were simple. There are a host of concerns about the bailout package – from the burden it would leave on future taxpayers to fears that it “could permanently and fundamentally change the role of government in the American free enterprise system”

According to today’s New York Times,

“Supporters of the bailout proposal had argued that it was necessary to avoid a collapse of the economic system, a calamity that would drag down not just Wall Street investment houses but possibly the savings and portfolios of millions of Americans. Opponents said the bill was cobbled together in too much haste and might amount to throwing good money from taxpayers after bad investments from Wall Street gamblers.”

“We need to put something back together that works” a grim-faced Treasury Secretary Henry Paulson said. But all sides did agree that the effort to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression of 1929, could not be abandoned.

Why did the US Government kept lobbying for a bailout?

The legislation the administration promoted would have allowed the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions. Getting those debts off their books should bolster those companies’ balance sheets, making them more inclined to lend and ease one of the biggest choke points in a national credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy, which is already sputtering. But what if the plan did not work? Jesus knows best…

Leave Jesus, even Paulson knows that this time, it is really not going to be easy.

“We need to work as quickly as possible,” he said gravely. “We need to get something done.”

Time for a NEWer DEAL ?

Now when he invested $5 billion of his own money in Goldman Sachs, even Warren Buffet got a great deal. So why not the average American taxpayer? I think that the mission of this bailout or rescue should be to use the financial collapse to institute genuine reforms. Since the problem in the markets is a reflection of the larger problem in the economy, why not fix the economy? Is it not the time for a “NEWer DEAL“?

The financial organization’s generation is changing. The old is dying, and the new cannot yet be born. In the interim, steps need to be taken to support the birth of new ones rather than trying to save the old at the expense of newer ones.

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  1. Hi! I was surfing and found your blog post… nice! I love your blog. 🙂 Cheers! Sandra. R.

    Sandra R

    September 9, 2009 at 10:07 pm


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