Letting the free market reign right now means an immediate drop in the stock market of a minimum 20% with everyone freaking out, running to the banks, withdrawing the 401ks et al. Banks are already hoarding money because they are scared to death. Massive bank failures above the level that FDIC can handle. No money to be had from any source for business, who then go out of business leading to massive unemployment. It isn’t hyperbole.
Besides, it technically isn’t a buyout because the US Govt is BUYING mortgages for 10 cents on the dollar, they will get paid on at least some of them. Over time it is actually possibly they will make money on the deal.
The alternative is the collapse of the financial system. There is already a bank run going on in Hong Kong due to a rumor. We were THIS CLOSE last week to 1929 until Paulson announced this plan.
If some form of this doesn’t pass, as Jim Cramer just said on Mad Money, say hello to the stone age, bend over and kiss it all goodbye.
I don’t think people realize this isn’t the “oh we can stall and come up with a plan to save a disaster later”, it is THE DISASTER that no one wanted to get passionate about for 15 years. It started in 1993 (or you could go back to Carter) and here we are.
There are no good choices here. Watch an episode of House...all those decisions they make to almost kill the patient to save him? Welcome to it.
And I’ll add a lot of those things mentioned need to be done too. Tax cuts, massive spending cuts, mark to market changes etc etc etc.
This has to be an opportunity to change a lot of flaws, but we all waited until the day of death to do it. There isn’t time to eat right and make yourself better.
Chances are slim to none. The cost to taxpayers in the S&L bailout was $85 billion. That cost will pale in comparison to what the final bill will be on this government intervention.
>>>>>The alternative is the collapse of the financial system.
BULLoney! This is a government boondoggle that will only grow in scope and size and as I said, the taxpayers will foot the bill for rescuing investment banks from bad business decisions.
No bailout!
If this bailout goes through, then within the next decade we will face a crisis even worse than the present one. Maybe a bailout will be possible then too, maybe not. But things are going to fall, hard. And a bailout now will do nothing except ensure that when they do fall, it'll be worse than if they were allowed to fall today.
If things drop today, it's possible that the market might be in a recovery cycle when the Social Security bomb hits. Otherwise, if the economy hasn't collapsed before then, the SS bomb is guaranteed to collapse it. And the combination of the SS bomb and market collapse will kill the country. May as well start learning Chinese.