Does Anyone feel like Bailing

[tw]

Originally Posted by classicman

Insight on Government Rescue Plan

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.

[tw]

Some numbers to put all this into perspective.

The world has about something just over $70trillion - all currencies combined. This US financial market meltdown has destroyed about $2trillion. The US will spend another $1trillion on "Mission Accomplished". Government has already spent $0.7trillion on a bailout - expect that number to double. The Defense Dept budget under George Jr has ballooned to $0.7trillion per year. US Federal government debt (treasury bonds et al to pay for our fiscal mismanagement) is somewhere between $5trillion and $8trillion depending on with game is used to measure it. A number that is guaranteed to increase massively and that was quickly approaching zero during Clinton's time.

For twenty years, America had seen a fairly constant growth rate. With 2000, and once we eliminate the distortions of inflation and economic wealth fueled by debts not yet paid, America has seen little if any economic growth. For all these GNP increases, we also have incurred massive debts that have still to be paid - such as most of the $trillion for "Mission Accomplished".

Get yourself financially stable. The numbers have long suggested that things could be getting much nastier. We still don’t know how many more ponzi schemes will collapse. Too many unknowns still remain.


We know this. The average American income has dropped 2% while welfare to the rich has significantly widened the difference between rich and poor. This occurred once previously in American history – just before 1929. Get out now from under credit cards and car payments.

[xoxoxoBruce]

1920 to date.