Hi.
The markets are in turmoil. And the same people who have created this mess are blackmailing you with threats of a Greater Depression to the tune of 700 billion dollars. Never mind the fact that the fed on its own just pumped in another 630B without any congressional oversight.
The threat is that if we don't bail out the top tier finance players, they will fail and we will have a recession. This is a natural part of the business cycle. This is not something to be feared. Their failure is a consequence of their willingness to take substantial risks, with leverage multipliers beyond all rational judgment. New top tier finance players will rise up and take their place. And for a time they will invest with caution and sound judgment until greed gets to them and the cycle repeats.
The secondary threat is that commercial loans wont be done, companies will not be able to make payroll or purchase inventory, etc. So, rather than bail out the bankers, use a facility like SBA loan programs but beef them up for larger companies if needed. The 2nd or 3rd tier banks that survive would be more willing to write the loans as they would be guaranteed. If they don't have sufficient funds to write the loans, they will raise interest rates to attract deposits. Thus a commercial loan crisis could be averted with minimal government intervention.
The worst part of this entire boondoggle is that the desire to give so many Americans a chance to own their own home was an illusion. Affordability is not created by giving them increased credit lines, but rather by increasing their earnings and economic potential. The debt they are now facing will probably keep many from ever owning a home again.
The markets are in turmoil. And the same people who have created this mess are blackmailing you with threats of a Greater Depression to the tune of 700 billion dollars. Never mind the fact that the fed on its own just pumped in another 630B without any congressional oversight.
The threat is that if we don't bail out the top tier finance players, they will fail and we will have a recession. This is a natural part of the business cycle. This is not something to be feared. Their failure is a consequence of their willingness to take substantial risks, with leverage multipliers beyond all rational judgment. New top tier finance players will rise up and take their place. And for a time they will invest with caution and sound judgment until greed gets to them and the cycle repeats.
The secondary threat is that commercial loans wont be done, companies will not be able to make payroll or purchase inventory, etc. So, rather than bail out the bankers, use a facility like SBA loan programs but beef them up for larger companies if needed. The 2nd or 3rd tier banks that survive would be more willing to write the loans as they would be guaranteed. If they don't have sufficient funds to write the loans, they will raise interest rates to attract deposits. Thus a commercial loan crisis could be averted with minimal government intervention.
The worst part of this entire boondoggle is that the desire to give so many Americans a chance to own their own home was an illusion. Affordability is not created by giving them increased credit lines, but rather by increasing their earnings and economic potential. The debt they are now facing will probably keep many from ever owning a home again.
