Posted by Tom L. on 10/1/2008, 8:13 am, in reply to "Re: And even before that ..."
Not doing this bailout means that the market will correct itself naturally and stabilize.
One of the main reasons for the instability of the current market is the artificial forces that have been directing the mortgage fiasco. Alot of banks were forced to makes loans that under more reasonsable circumstances they would not have made. This artificially inflated the market. (i.e. it created a "bubble")
As a result of that artificial inflation, other things started going wrong which in turn required more government intervention. For example, the frequent lowering of interest rates by the Fed. Also more government spending to keep currency in circulation when the market was demanding less currency. All of this served to inflate the market even more and devalue the dollar.
Now, the market wants to correct itself from all of this. We saw a partial correction this past Monday when the Dow dropped. Guess what else happened on Monday? The dollar got a little bit stronger.
For me, I would rather have one hundred hard dollars to spend than to have one thousand dollars whose vaule is dependent on someone else's confidence in that thousand dollars.
I'm no expert on the inner workings of Wall Street, but macro-economics is fairly easy to grasp. I'm really glad I took the Economics classes in college.
Tom L.
Class of '84
--Previous Message--
: I totally agree. Plus it sends a message that
: the government will bail anyone out of
: anything.
:
: I admit to not being very well educated on
: this whole subject... what are the
: implications if the government doesn't bail
: the companies out? What does it mean for the
: economy as a whole, and taxpayers
: individually?
:
:
: --Previous Message--
: ... Republicans as early as 2000 and before
: had been asking to do something about it.
: It all goes back to the 1977 Community
: Reinvestment Act that basically forced banks
: and lenders to make loans to people who
: could not pay then back. The CRA was
: expanded during the 90's to include higher
: risk loans as well.
:
: Despite the threat of prosecution from then
: Attorney General Janet Reno, the banks could
: have said "No" and the
: Congressional Republicans could have backed
: the banks up. But they didn't and the
: Republicans wouldn't.
:
: There is definitely plenty of blame to go
: around.
:
: I just don't want to see the American
: taxpayer held responsible for someone else's
: irresponsibility.
:
: Tom L.
: Class of '84
:
: --Previous Message--
: And don't get me wrong, I am NO Bush fan,
: but
: Bush had been asking Congress to do
: something about this for a while, and they
: did nothing.
:
: --Previous Message--
: I can't stand Pelosi OR Bush. And a lot of
: the blame for the current mess goes back to
: the Clinton years, though the blame falls on
: both Republicans and Democrats. Anyone who
: thinks ANY politician (on either side of the
: fence) is truly concerned about his/her
: welfare is fooling him/herself.
:
: I'm just going to vote for the one I think
: will screw me less.
:
: JR
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