Yesterday I wrote that "Bush has done to the US economy what no terrorist or hostile country could ever do, that's quite a legacy!"
I was wrong, Bush merely loaded the gun; Congress, in an act of collective madness, has in effect destroyed the US economy by voting against the bailout plan.
Given that the plan was the only one on the table, one might ask why they jettisoned their only hope. Regrettably partisan politics outweighed commonsense and selflessness, as the Republicans used a speech by Nancy Pelosi (seemingly she hurt their feelings) as their excuse for voting "nay".
The result of this collective madness was entirely predictable, Wall Street suffered its worst ever one day fall in history (down 778 points).
The essential truth that those who cite "moral hazard" fail to grasp is this.
If your neighbour's house is buring down, even if he started the fire himself, you do not stand idly by watching it burn; you try to put it out.
Once the fire is out, you can punish him afterwards.
The "good people" in Congress will have a lot of explaining to do, when their constituents realise that falling shares mean that their savings and pension plans are going down the toilet.
Thursday is now slated for a rerun of the vote, let us trust that some commonsense now enters the minds of Congress.
Showing posts with label george bush. Show all posts
Showing posts with label george bush. Show all posts
Tuesday, September 30, 2008
Monday, September 29, 2008
The Great Bailout
US President George Bush has said that Democrats and Republicans will come together to pass the bailout plan to rescue the US economy.
All well and good, if what he says actually comes to pass. However, the bailout was never a matter of merely throwing billions at the problem to make it go away but of injecting confidence into the economy.
The bailout plan had the possibility of working, until it became apparent that Paulson in fact had no plan and McCain pushed himself in front of the cameras in a bid to appear as a dealmaker (thus wrecking any possibility of th deal being passed last week).
Bush then publicly said that the world economy was in gave danger if the plan was not approved, and privately said during the disastrous McCain inspired meeting that "this sucker is going to go down". Paulson, pouring petrol on the flames, then got down on bended knee to Nancy Pelosi (House Speaker) begging her to pass the bill.
Those actions and words send a very clear signal that those in office are not in power. No matter how many billions of dollars are now thrown at this issue the markets have had the confidence kicked away from beneath them by the failed leadership in Washington, and the desire of a very old angry man to become president.
The road ahead is uncharted and dangerous. Bush has done to the US economy what no terrorist or hostile country could ever do, that's quite a legacy!
All well and good, if what he says actually comes to pass. However, the bailout was never a matter of merely throwing billions at the problem to make it go away but of injecting confidence into the economy.
The bailout plan had the possibility of working, until it became apparent that Paulson in fact had no plan and McCain pushed himself in front of the cameras in a bid to appear as a dealmaker (thus wrecking any possibility of th deal being passed last week).
Bush then publicly said that the world economy was in gave danger if the plan was not approved, and privately said during the disastrous McCain inspired meeting that "this sucker is going to go down". Paulson, pouring petrol on the flames, then got down on bended knee to Nancy Pelosi (House Speaker) begging her to pass the bill.
Those actions and words send a very clear signal that those in office are not in power. No matter how many billions of dollars are now thrown at this issue the markets have had the confidence kicked away from beneath them by the failed leadership in Washington, and the desire of a very old angry man to become president.
The road ahead is uncharted and dangerous. Bush has done to the US economy what no terrorist or hostile country could ever do, that's quite a legacy!
Monday, September 08, 2008
Freddie and Fannie Balied Out
President Bush bailed out Freddie Mac and Fannie May yesterday, as he announced that the two mortgage lenders would be taken over by the US government.
Seemingly they were weeks away from collapse.
President George Bush is quoted in The Times as saying that the failure of Freddie or Fannie would have been "unacceptable".
"Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing.
Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth."
Henry Paulson, the US Treasury Secretary, said:
"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit.
Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."
This robust and decisive action contrasts with the dithering of the British government last year, when faced with the Northern Rock fiasco.
British banks have invested billions into bonds insured by Freddie and Fannie, had they collapsed the banks would have made significant losses.
We can breath a short sigh of relief, and be thankful that the US government did not shy away from a tough decision or dither over it.
Gordon Brown take note!
Seemingly they were weeks away from collapse.
President George Bush is quoted in The Times as saying that the failure of Freddie or Fannie would have been "unacceptable".
"Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing.
Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth."
Henry Paulson, the US Treasury Secretary, said:
"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit.
Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."
This robust and decisive action contrasts with the dithering of the British government last year, when faced with the Northern Rock fiasco.
British banks have invested billions into bonds insured by Freddie and Fannie, had they collapsed the banks would have made significant losses.
We can breath a short sigh of relief, and be thankful that the US government did not shy away from a tough decision or dither over it.
Gordon Brown take note!
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