Free Republic

NEW YORK: There is a simple reason why US Treasury Secretary Henry Paulson’s $700bn bail-out package has been so hard to sell to politicians and the American people: it won’t really work. Despite the historically massive expenditure and all the little clauses to make sure Wall Street fat cats get their comeuppance, the plan is unlikely to do anything to save the world’s biggest economy from a long and crippling downturn. It will doubtless save some banks from collapse, but is that worth the government putting itself on the hook for nearly a trillion dollars more than $3,000 for every...

(10/07) A High-Risk Market ...... Even before the twin hurricanes the consumer savings rate had turned negative, household debt was at record highs and home owners were using soaring home prices as huge ATM machines yielding hundreds of billions of dollars in cash. With housing prices starting to soften, energy prices still high and real wages under pressure, consumers’ ability to spend seems severely restricted in the period ahead. These trends have been further exacerbated by the two hurricanes that have created negative domino effects throughout the economy. So far consumers have felt the impact of higher gasoline prices, but...