Getting up to Speed on the Economy

I’ve had quite a few people ask me about the economy lately…what I think of the bailouts and whose fault all this is.  And most of the time I just don’t know where to start.  It’s not simple to explain.

First of all, anyone who says they can provide a quick summary of the problem is wrong…there is not a quick summary of this.  It’s not just about the risky mortgages given out over the past 10 years, it’s not just about the consumer debt, and it’s not just a Republican or Democrat issue. 

It is affecting the entire world…global crisis if you will.  So that should tell you right away that this isn’t simple.  Let’s take a look at some of the issues going on right now:

  • That 700 Billion Dollar Number means absolutely nothing.  They just made it up.   “It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
  • The original bailout bill was only 3 pages!  3 Pages for 700 billion dollars?  Anyone who knows anything about bills realizes that this is unheard of.  They just wanted a blank check with no oversight and didn’t even try to disguise it.  Those that think it is a bad thing that the bill is a lot longer now need to go back and read that “700 Billion” one more time.
  • Paulson is leaving office in 4 months – meaning he can be heavily infuenced by outside forces in his decision making
  • The bailout will not help the average person at all.  That’s why they don’t care that the majority of Americans are against it.
  • It’s only putting off the inevitable…the market has to correct itself at some point.  Housing Prices were artificially high and interest rates artificially low. 
  • Why are these other spending bills going through right now?  Nasa buying Russian Spacecraft, Missile Defense Systems, Huge Defense Spending Bill – 634 billion
  • If you want to try and protect yourself.  change your money into something other than US dollars.

There is one interesting question that really makes you think.  Who is putting the pressure on the US Gov’t to do this Bailout Deal ASAP?  I don’t have the answer…and it makes my head hurt to speculate on it. 

And for all of you that say that the bailout is needed and everyone who is in the know agrees…read this.

And if you want to learn a little more about this crisis then take a look at the derivatives bubble and the credit default swaps.  It’s not so much that the banks gave out bad mortgages as it is what they did with those mortgages once they had them.    And I think Obama and McCain have zero idea what to do.  McCain proved in the Republican primaries that he is clueless on the economy. 

But notice again how fear is playing a role in all of this and the Democrats are the first to fold…leaving so called “Rebel Republicans to fight”.   Rebel Republicans – who see Paulson’s proposals as socialism by the back door – were warned they will be responsible for causing an “amazing catastrophe” if they continue to oppose the plans, which would see taxpayers buy up the bad debts of failing banks

What’s it called when the National Government Owns and Controls the Market?

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