Welcome to Economics 101
Published 7:27 pm Monday, September 22, 2008
It doesn’t really matter whether you’ve been following it or not, it’s hard to imagine you’ve missed the news that you and I have bought our way into several mortgage companies and banks recently.
We don’t actually have a lot of say in the operation of these companies and we won’t reap any benefits should their economic viability turn around. In the worst investment deal ever, we’re footing the bill for the federal takeover of banks and businesses which have failed due to poor decision making and hedging bets they couldn’t cover if they were called.
What has been termed a “bail out plan,” President Bush has asked Congress for a $700-billion financial intervention plan to purchase bad debt from American financial institutions.
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The health of the American banking system is extremely important but many analysts fear that in the long term, the package could burden the American economy as taxpayers are ultimately backing it. It’s a band-aid of sorts – a short-term solution to the long-term problem.
The price of everything is climbing and the value of the dollar is sliding. A stock market that used to withstand temperamental mood swings has been battered up and down for the last several months, rising and falling with each Wall Street report.
In the grand scheme of things, if the federal government doesn’t stop robbing Peter to pay Paul, the taxpayers are going to be the ones that need financial aid and its not likely there will be anything left in the till.
– Jason Cannon