Yeah, as I've been reading about this more, it seems like I was on target with that last point: this whole $700 billion plan will go towards bailing out corporations without addressing the underlying problem of foreclosure rates and average Americans who have watched their nest eggs shrivel up and die. It seems like the idea is for the government to buy up bad assets, so that threatened financial institutions are given the space and leverage to rebuild upon whatever strong assets they still have. Nobody has addressed exactly what the government is going to do with all of these bad assets that it buys up, but people seem puzzled by the idea that the end result won't be that the government suddenly owns a controlling share of the corporations it bails out (ie, we're not looking at a whole lot of mini-AIGs). And if the government does end up with influential stakes in all of these institutions -- I really don't see how it couldn't, but I'm probably missing something -- what's it going to DO with them?
I am very aware of my ambiguous use of "government" here, as though that really means anything. But nobody seems to be saying anything about which part of the government is undertaking this project in what capacity, and therefore precisely what kind of risk is being assumed.
From what I understand of Reaganomics... this seems like yet another misguided attempt to make use of trickle-down economics. As though that's ever worked before.
From what I understand of it though, if the government doesn't buy out, then that would make credit even harder to get because no one would be willing to invest capital. I could be totally wrong though.
Well, frankly, credit SHOULD be harder to get -- the reason we're in this slump was because credit was given out willy-nilly to people who shouldn't have received it and who couldn't afford to pay it off.
The idea of the government stepping in is not objectionable to me. But the more I learn about this proposed plan, the more ridiculous it seems. Here's the best article I've seen on it so far, which details just how shortsighted and unnecessary it will be to throw $700 billion at this problem with no oversight and no real structure:
I am very aware of my ambiguous use of "government" here, as though that really means anything. But nobody seems to be saying anything about which part of the government is undertaking this project in what capacity, and therefore precisely what kind of risk is being assumed.
From what I understand of Reaganomics... this seems like yet another misguided attempt to make use of trickle-down economics. As though that's ever worked before.
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The idea of the government stepping in is not objectionable to me. But the more I learn about this proposed plan, the more ridiculous it seems. Here's the best article I've seen on it so far, which details just how shortsighted and unnecessary it will be to throw $700 billion at this problem with no oversight and no real structure:
http://www.nytimes.com/2008/09/24/business/24leonhardt.html?_r=2&oref=slogin&oref=slogin
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