Financial Bailout Two Sides Same Coin

by Bob Smith
(New York)

To be honest, I'm not very confident that the financial bailout plan is the correct measure to deal with the staggering debt-related problems in our economy. I do agree that it will have some short term positive effects- after all, you can't throw 700 billion dollars at something and not have some positive effect.

The problem is that we're using taxpayer dollars to buy toxic debt from financial companies, but we're not getting any ownership, in the form of preferred stock, in said companies.

Adding to the problem is that the government is naming its own price for the debt, and if it's too low, the banks won't recover; but if it's too high, every taxpayer will pay extra for it.

There are a prevalent number of economists who recommend going with a preferred stock plan, and the department of the treasury will have it fully available as an option. However, most banks (and their lobbyists) are against such a plan, and the outlook for such a plan happening is slim.

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