Bailouts

[krasnoludek]

Okay, so I wasn't too happy with the $700 billion bailout of the US financial sector, and it doesn't help that now Treasury secretary Paulsen is constantly changing the terms of the authorized bailout so that now the US government is purchasing bank stock instead of assets. Paulsen knew this was what he was going to do, yet he pitched the plan to

Comments

[justanothergeek]

I don't think Paulson knew he was going to switch the plan. Actually when the initial plan came out, a lot of people said this is stupid, you should use the money to buy bank stock (like they did in England) instead of buying bad mortgages. But he persisted with his stupid initial plan. I think the whole bailout idea is stupid and that Paulson is an idiot, but I don't think he was planning to switch the plan until he realized that the people who said the first plan was idiotic were right.

As for the $2 trillion loan, of course it's ridiculous. But the claim is that if the government tells us who is getting the loan, it will make things worse because then nobody from the private market will be willing to loan money to those companies. So as long as the government keeps their identities secret, there will be suckers in the private financial market who will be willing to loan to these companies (that are, by definition, about to fail, else they wouldn't need trillions of dollars from the government).

This kind of government meddling in the economy is ineffective and a huge waste of tax dollars. Everything the government does has side-effects that they then have to counteract, ad infinitum. A bunch of companies made mistakes or are simply not structured in such a way that they can remain solvent during a recession. Tough luck. They have to fail. Sure, let's give much longer than normal unemployment benefits for the employees affected. But please don't waste my money on bailouts.