A vote of no confidence in the bailout
Sep 29th, 2008 @ 09:56 am › J. Henderson
The S&P 500 index is plunging 3% Monday following widespread news reports that the $700B government bailout for Wall Street has been agreed to and will be passed today by Congress. Proponents of the bailout had warned of a stock market crash if Congress failed to enact the socialist rescue plan. Credit spreads are wider and markets continue to be seized up, prompting the Fed to double the size of its liquidity injections to $300B. This is a sign from both equity and debt markets that there is little faith that the bailout will solve the financial crisis.
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11 Responses
The US 3 month LIBOR spread over 3 month overnight interest rate swap widened 11 basis points to a record high of 208 basis points this morning.
It won’t be long before we hear the old cry that we must destroy the market in order to save it.
Heh. We already knew that they didn’t understand the problem, but what could make it more obvious than an attempt to just throw money at it?
Of course, it isn’t going help. The purpose of the “bailout” is to destroy the united states not to help it. This is just the next step towards a total socialist takeover by the bankers. The problem in the United States can only be solved by eliminating the thing that created it: The Federal Reserve.
Does anyone have any figures on how much corporate debt is maturing in 2009?
There are approximately 138 million taxpayers in the United States, so there are approximately 138 million voters. “YOU” who “WE” elected are willing to “GIVE” 700 BILLION DOLLARS to corporations who do not “VOTE” individually. But, do put dollars in “YOUR” pockets, so it must be “GREED” on your part and not “LOYALTY AND HONOR” that drives “OUR” government officials. If I am wrong, than give each taxpayer “ONE MILLION DOLLARS – FREE OF TAXES FROM FEDERAL, STATE AND LOCAL”, that is 138 million dollars plus processing – so rounded maybe 200 million dollars. What would consumers do with that money, not declare bankruptcy for one, pay their home off, pay all debts, send their children to college, start a small business, purchase a first home, pay student loans, buy food, pay medical bills, get a needed medical service, put some into savings and buy stocks. Speaking of BK’s aren’t those really up, so if you gave $1 million to each taxpayer and stipulated Bk’s to be blocked for up to say 5 years and that say 25,000 is taxable unless invested in stocks or bonds. Wow, this is so easy… but I am sure that “OUR” government officials can make it more complicated, I have faith. I am, always have been and always will be a capitalist – so it makes more sense to pay less and push the money through the capitalist market in “True†capitalist manner, let the market (people = demand, market = supply) process the money. The loser’s will be the companies that are not run properly and the winner’s will be the American Taxpayer/Voter. It doesn’t matter if you have faith in the consumer to spend it correctly, big business blew it… so give the American consumer the opportunity to make things work; it’s their money.
Actually, it is easy to understand how the bailout will make things far worse. All that 700B must come from somewhere. If the government gets it from the taxpayers it kills the economy and makes the housing situation worse, if they get it from inflation – it kills home owners already maxed out in debt and makes the situation worse.
EGCAKO –
Check your numbers – you just spent $200 trillion ($138 x 10^6 ) x (10^6) = $138 x 10^12 before you rounded up.
OK before anyone else says anything, I’m stupid. I guess I let my being upset get the best of me. Thanks vlad popovic for not being harder on me. I’ll crawl back in my hole and shut up.
EGCAKO,
I have seen these types of proposals before, and I don’t mean to be harsh, but I would like to express why they are a bad idea even if they are in amounts that are capable of being monetized.
1) If printing money and encouraging consumption actually led to net economic gain, the Keynesians would have been right and counterfeiting would not be illegal, but should rather be encouraged.
2) Artificially increasing consumption leads directly to the relative impoverishment as compared ex ante. Consumers will bid resources away from the capital goods industry, reducing the intensity of capital in production, consequently decreasing the total amount of consumer goods produced, resulting in increased prices and leaving the worker with a lower real wage (though in nominal terms, it may increase somewhat, it will not offset the general rise in consumer prices caused by the consumption of capital).
The quickest way to impoverish a nation is to start handing out money to consumers. By the way, Jesus Huerta de Soto’s book is riveting.
“The grown-ups are in charge now.”
-Dick Cheney, way back when.
And a fine job yez all have done lads.Be sure and help yourselves to whatevers left in the till on your way out.
As for the rest of us, I think there’s a bit of change in the sofa cushions.
And don’t worry about people waking up to the Fed,
it’ll survive this ok.If the Depression didn’t motivate voters to abolish the Fed, this won’t either.