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Many people were caused to believe the Paulson Plan as modified was a 'bailout" of Wall Street. Nothing could be further from the truth.
First, the 770bn plan was a combination of capital infusions that were aimed at freeing the frozen credit markets. Banks are not dealing well with other banks because of the enormous hidden bad debts some banks hold on their books due to the sub-prime mortgages they carry. Second, when credit slows or stops there is little liquidity. That means few, if any, new loans can be made. That in turn deepens the effect of the freeze.
Next, the Fed would buy many of the bad or risky mortgages in packages, hold them while renegotiating those loans to allow the homeowners to remain in their domiciles and keep paying on them. This could even result in a profit down the road for the Treasury. Of course, many of the mortgages would be failures anyway. Therein is the risk factor.
Without credit the country has no economy. Everything runs on credit.
Wall Street isn't a remote place anymore. If you have a retirement account, a pension fund, a 401K, a Keogh or an IRA, your investments are 99 percent on Wall Street. What happened yesterday is when the Dow Jones Industrials fell 777.68 points, the American people lost over 1 Trillion two hundred million dollars. Much of that was lost to pensions, 401Ks, IRA accounts and other retirement securities.
When you get your month-end statement, check to see how much it cost you.
The flip-side is what happens without a plan in effect. Without credit flowing through the financial system you will lose more. Your interest rates will increase. Your credit limits cannot be increased, and I just heard that some credit cards are LOWERING those limits to get more capital. Forget college loans, car loans, new mortgages - even with AAA credit scores - and revolving credit.
Farmers will fail. Small businesses won't be able to order Christmas merchandise. Independent gasoline stations won't be able to order more fuel for the pumps. The Internet businesses that rely on credit card purchases will slow to a virtual halt. Many businesses won't be able to meet payrolls. On and on.
What happens on Wall Street doesn't stay on Wall Street.
It comes right into your wallets and purses.
We are all in this together.
By creating another $700 billion out of thin air, in addition to the $630 Billion they created the day before yesterday (are you aware of that?...without anyone's consent, they did that), you are depreciating the value of your dollars to save the credit industry that got us into this mess in the first place. It's not going to solve anything because it will only drive up inflation, excessively. So, now, the price of everything is going up, (most likely will triple before all is said and done because of hyper inflation), but, Jon, where is your income going, what direction?
Who gives a rat's butt if you can or can't get a loan at that time because guess what? Based on your income to cost ratio, you're not going to be able to afford it anyway.
Also, libertarianism is not something you can subscribe to and then just leave. Libertarianism is a belief; it's an understanding of what is. I'm a life-time republican who is discovering that my principals fall in line with the libertarian belief. I am constant, and stick to my principals. I'm not a wishy-washy sort of person who jumps from one bandwagon to another because of my emotions or my personal financial situation. I am fiersly independent and I live to do what is right for all. I am the least selfish person you will ever come in contact with. My opinion and perspective come after great contemplation, tremendous unbiased thought, and incredible amounts of research. I try to always make certain I know exactly what I am talking about. It is never about me. It is always about what is right and what is best for everyone. That makes all the difference in the world in deciding what is best for the next 7 generations to come for that is who will be affected by the extremes of this mess. It will be far worse for them than it will be for us
Paulson, Bush, Obama, McCain, Wall Street lobbyists, and a slew of others have one goal - TO PROTECT THEIR INTERESTS. That $700 Billion will NEVER make it to the credit market allowing for you and me to obtain a loan that we would not otherwise have received. It will be absorbed by the top of the pyramid and if you think otherwise, my dear friend, you're not understanding the magnitude of those at the top of the pyramid and how and where that money will go first. They are THIEVES attempting to raid the national treasury and you are advocating for them to do so. Shame on you. I still love you and I think yo are great but shame on you for promoting such a horrible thing. Innocently or not, ignorance is no excuse.
Please, take a little bit of time to learn about the Derivatives market. Once you do, you will learn that this $700 billion is an effort to line THEIR pockets before everything crashes just as it was to bailout AIG, Fannie Mae and Freddie Mac. Those three institutions were bailed out because of the DERIVATIVES. Don't get sucked into that MSNBC crazy think. I watched Suzie on Larry King the other day and her crazy rants about credit, credit, credit. She's wrong, John. Just like those FAUX News bubbble heads who were bullying Paul Schiffer, those idiots are all wrong.
They're wrong because they're not thinking about what is best for the country and the entire country's economic system because they don't understand it. All they have learned through their financial exerience is how to make money for themselves. They're thinking about what is best for their own pockets without realizing how terrible that is for our country. That is where so many are going wrong. It's not about each of us, it's about our Country and the nation as a whole and saving our dollar before it's gone. That is the real issue. The $700 billion won't save our dollar; it will ENSURE that it fails.