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Originally Posted by classicman
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That Fidelity article discusses some aspects of this financial market meltdown in terms of what the government is doing and hopes to accomplish.
It's not going to stop at $0.7trillion. Expect government to borrow massively to apply something under $2trillion.
Now a larger picture that is concerning many. Recessions are necessary to fix (remove) the reasons for economic mismanagement. That means top management. Unfortunately, this 'emergency' bailout programs will intentionally ignore that need and in many cases will protect the reasons for such problems.
Recessions and bankruptcies, if left to do what is necessary, eliminates bad management while saving employees and stockholders. After all, that is what happened to Ford in 1981, Chrysler in 1979, etc. But if the problem gets protection using spread sheet games (no SEC prosecution, Arthur Andersen fraud, etc), then basic economics mean even the employees and stockholders get punished (Enron, Lehman Bros, AT&T, S&L Crisis, Long Term Capital Management).
This government bailout all but guarantees inflation. Government has no choice because we used easy money to fix the recession rather than what was creating the recession. Years ago, it was obvious that interest rates needed to rise. Instead we dropped interest rates to further inflame a housing market no justified by the productivity in America. And now we are further stuffing the economy with more money without going after the fundamental reasons for this meltdown.
When government throws money at the economy to 'fix' it, then economic forces take revenge years later. We have no doubt that the revenge will be coming. We just don't know exactly when, how severe, or in what form. But we do know what happened last time government threw money at problems. It was never supposed to be possible - massive inflation and recession - called stagflation. Economic forces took revenge on Americans throughout the 1970s because of fiscal irresponsibility especially in Vietnam.
Expect more government welfare checks to big business. And then expect this nation to sell itself to the world to pay for fixing a recession using massive tax cuts, silly tax rebate schemes, ridiculously low interest rates, and legalizing fiscal irresponsibility.
The damage was done years ago even as the president was declaring "Mission Accomplished". Now we pay for government's overt fiscal mismanagement. Cheney said, "Regan proved that deficits don't matter." Wrong again.