Financial Bailout Plan Not The Right Bucket

by James
(Eureka, CA, USA)

In my opinion the new government financial bailout plan is not going to be successful. I think it is targeted at the wrong location to improve liquidity in the long run. I think it will only kick the can down the road so to speak until after the election so that the conservatives can blame the new administration for all the problems.

If they were truly interested in preventing recession, they should have attacked the liquidity problem directly by providing loan guaranties rather than offering to buy up worthless assets.

The amount of the toxic assets out there is what dooms this idea. Removing a few hundred billion from a pool of 50 or so trillion will not have the desired effect. It may allow the people on their way out to escape with their golden parachutes but the house of cards will still eventually collapse as consumer demand falls causing layoffs.

This will lead to another round of foreclosures and continued collapse of the housing market the source of the disaster in the first place.

We will no longer be able to pull money out of housing to finance consumer spending so we need to revitalize manufacturing for a true recovery.

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