The Bailout

I have thought a lot about this "economic crisis" and have wavered on whether or not I support, rather think we need, the federal bailout. I will be the first to admit I don't know jack about economics, which limits my ability to objectively understand the subtleties of this situation. With all that said, I am against any sort of bailout from the government (at least so far as it has been presented).

My reasons for my stance are thus:

1. Any entity taken over or controlled by the government is inefficient and burdensome to tax payers.
2. All government programs (as far as I can tell) are government programs for the simple reason that they lose money and private companies wont/ can't run failing programs.
3. Budget 101, if you live over your means, and get over extended, you have to then live below your means in order to pay all outstanding debts (true, sad, but true). Thus our country needs to reset our spending based on GDP or whatever it is that the USofA counts as"income"
4. I have not heard one single person say that this bailout, or whatever comes out of congress, will actually work and that no more $$ will be required. Bear Stern, Fannie and Freddie, AIG!!! At what point do we say enough is enough???
5. If the ultimate goal is to have liquidity, so that the markets don't freeze, isn't there a better way than giving $$ to the large investment banks that got into trouble.

Coyote blog has a good post on his alternative HERE.

Robert P. Murphy also has a good post titled "The Great Bank Robbery of 2008.

In very simple terms, the Paulson Plan is a straight-up transfer of $700
billion — and counting! — from the taxpayers to a few big financial
institutions. (Some smaller banks are complaining that they don't own the exotic
mortgage-backed derivatives, but rather simple mortgages. They do not believe
they will see a dime of the Paulson money.) It's easy to get all twisted around,
but just remind yourself of this: the Paulson Plan has the federal government
borrow $700 billion (through issuing Treasury debt) in order to buy assets from
Wall Street banks. (We are neglecting the time delay in the program; the entire
$700 billion wouldn't be spent all at once.)

some people want to say that if the government pays $700 billion for a
portfolio of assets that is really only worth $400 billion, then the taxpayers
really only lost $300 billion, not the full $700 billion.
Yet this thinking
is naïve. The taxpayers are not going to be treated as equivalent to
shareholders of a firm that just acquired $400 billion in assets. The taxpayers
are not going to get a cut of the monthly mortgage payments (less the servicing
costs on the $700 billion in new debt) tied to the government's massive
portfolio. Instead, the government will simply bump up its annual spending by a
few billion dollars.

And then at some point — during a future Republican administration, no
doubt — there will be a push to "privatize" the secondary mortgage market, and
the government's portfolio at that time will be auctioned off at very generous
prices to politically connected institutions. For example, maybe the $400
billion portfolio is auctioned off for $250 billion. (Perhaps the big banks have
to set up subsidiaries owned by minorities and women who get preferential
treatment in the bidding process. But whatever the ruse, they will find a way to
justify the low prices.) When all is said and done, the government will have
played hot potato with the MBS, and the national debt — borne by taxpayers —
would be $450 (=$700-$250) billion higher.

He concludes with this insight:

Far from providing stability and confidence, the Fed, Treasury, and SEC's recent
moves have ensured that US capital markets will now function with the same
efficiency as public education in this country. The Paulson Plan is one more
step in the socialization of America, but it is also a great bank robbery.

Can you imagine a new government program entitled "No Tax Payer Left Behind"?

Henry David Thoreau: “This government never furthered any enterprise but by the alacrity with which it got out of the way.”