Friday, September 19, 2008

America Saves the World?

It looks like the US of A is preparing to crack open their wallet and foot the bill for the world's recent financial woes. Fed Chairman Paulson is suggesting a plan that could cost upwards of $1 trillion to bail out financial institutions according to Sen. Richard Shelby, the ranking Republican on the Banking Committee.

This plan looks to have support in both parties. I don't doubt it with an election coming up. Support probably divides evenly down who is facing a tough reelection and who isn't. I think writing a blank check to Bush to bail out banks is a little over-reactive. I don't mind the AIG situation but that sort of thing should be a lot more special case than a norm.

Here's the most sane comment in the linked article:
Sen. Jim DeMint (R-S.C.), a member of the Joint Economic Committee, told the Los Angeles Times: “What is missing from it and from the recent string of bailouts is a commitment to return to a free enterprise economy. ... What we need now is not what could be nearly a trillion dollars in new taxpayer bailouts but pro-growth policies that allow our markets to correct and start growing again.”

I think a few future bailouts are inevitable but a plan on how to learn from this situation is very much needed. What I'd really hate to see is an overreaction where we bail out everyone and then impose restrictions that erase any financial progress that was made in the past decade. Obviously a lot of ideas didn't pan out but a lot of things did. Babies and bath water are... no, wait a minute... you could stick your head up a butcher's... no, you're the butcher... Oh, you get the idea.

1 comment:

Cousin Pat from Georgia said...

I've really been waiting to comment on this to really try and wrap my head around what is going on right now. After all the rhetoric today from the Senate banking committee, and all the anger from both media and bloggers and taxpayers, I guess it just goes to show what a bitter pill this is to swallow.

It really looks like a damned if we do, damned if we don't spot. If the representatives of the taxpayers write the check, we're taking a risk that it works, and that we won't see half of that money ever again if any of it, but that money will keep moving and the economy will be able to fix itself. If the representatives don't write the check, we run the risk of contracting the financial systems that make capital available for small business and loans that allow Americans on Main Street to borrow money to create wealth.

Damn.