People are wondering why the bailout is not working. How can it – the mess was caused by government action, spending and lowering the interest rates that fueled an economy on borrowed money. That is all ended now. Time to pay the bills….
Last week the bailout bill passed – it was like pouring gasoline over fire. It will be known as The Great Bank Robbery of 2008.
They took the $700 bn, stuffed it with pork to make it $850 bn, it went from 3 pages to 451. I bet you no one even read it.
Last week in addition, the Fed “injected” $600 bn and the US government quietly passed another $630 billion spending bill which includes the largest spending bill for the Pentagon (a massive $488 billion). Great – war is a bigger priority in this country than the economy.
Its a lie – There is no credit crunch – today the Fed doubled their auction reserves available to banks to $900 billion.
The automakers are not selling vehicles because of high gas prices not because people are not financing cars.
Homes are not selling because they are overpriced and the sub prime “liar loans” (where anything you lie about including your income is accepted) are not available any more.
Banks are not lending to other banks because they do not trust each other and they have been burnt badly so they have stricter borrowing rules now for consumers as well.
I am staying away from borrowing, I’d rather put money in gold bullion or tax free municipal funds – Vanguard offers Tax Exempt Funds backed by states offering just over 5%.
The only way to a path to economic recovery is to stop the wars in Iraq and Afghanistan, close down the over 700 military US bases in 130 countries, stop threatening countries like Iran. The trillions going to the war should go back to the taxpayer as lower taxes which can be used as capital for investment.
That is the only way this economy will recover. More bailouts will only feed this fire….