Bail out?
Looks like Congress will be bailing out Wall Street with tax payer money. The bail out bill will be voted on first thing Monday, September 29th. What will this lead to? What are the implications? Why and how has our economy been brought to its knees? Well, lets give credit to where credit is due.
Yes, risky loans where made and accepted. Lenders and borrowers are certainly to blame. But what is the larger, root cause of all this? The Federal Reserve should share some of the blame, should it not?
The Federal Reserve, in all their wisdom, has been lowering interest rates for as long as this author has been alive. The Federal Reserve (FED) has made borrowing money so attractive, so much so that the housing bubble was given birth, not to mention the tech and Internet bubble before that. Had the FED not made credit so accessible, leading consumers to believe that they could not possibly lose out, we would not be in this mess. Folks, this is analogous to kids in a candy shop:
Shopkeeper FED: Ok kids, you can eat as much as you want, and we’ll work out the payment later.
Kids: We love candy!
Shopkeeper FED: Oh, don’t forget about these chocolate houses. I know they’re a lot to handle but I’ve made them even easier to take a bite out of!
Kids: Oooohhhh, this adjustable rate is giving me a stomach ache…
Shopkeeper FED: Well I don’t want you to stop eating candy, just keep eating and I’ll just keep lowering the interest rates…
And now the FED wants to swoop in and take up the role of Savior of the economy, fixing the problem that they created? There seems to be a disconnect here…. I liked what one Congressmen said of this government buyout of Wall Street firms: “if its too big to fail, it is too big to exist.”
Some similarities worth noting: both Presidential candidates support the bailout, and both have a bracelet. However, none of the third party candidates support the bailout, i.e. Chuck Baldwin, Bob Barr, and Ralph Nader. At the time of writing, this author could not confirm the existence of any third party bracelets.
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