How is the U.S. going to pay for the financial bailout, the stimulus package, and the new proposed housing bill? Well, we know that the new administration will not increase taxes to fund these “last-resort” projects. So, the U.S will do what we do best: create money out of thin air. Every time I turn on the TV, I see a once great capitalistic nation turn even closer to a socialist nation.

Obama’s stimulus plan of creating jobs by building infrastructure cannot work because he is being poorly advised. The solutions proposed by his economic team are going to make this problem worse in the future. All of these bailouts and stimulus packages are just to perceive a cushion for the fall, when in reality the financing of these so-called lucrative projects are non-existent. The Fed is destroying the U.S. dollar by printing money to fund the ‘cushion’ for our economy. We are not going to be able to spend ourselves into prosperity like this administration thinks. They are trying to keep housing and stock prices high in order to retain the paper wealth of these assets, which has vanished from excessive credit, and poor allocation of investments from past administrations.

These have been interesting times. America has seen bad times before, but mid-2008 could well go down as the most intimidating turmoil ever witnessed on Wall Street. Not since the Great Depression have the financial markets seen such bedlam without any passion for anyone standing in the way. The monumental loss of confidence changed the world economy, affected the presidential election, forced the government to intervene in the free markets, and all while erasing trillions of dollars worth of wealth.

The spark that started the fire on Wall Street was the debacle of Bear Stearns, which eventually led to a purchase by JP Morgan (JPM). This led to the government seizure of Fannie (FNM) and Freddie (FRE) and the third-degree burns to the nation's housing market. But that was just the beginning. The last quarter of 2008 faired much worse. Lehman Brothers evaporated from short sellers, a lack of capital, and toxic credit instruments. Merrill Lynch was the fate of a Fed-sale to Bank of America (BAC). And [[AIG]] was fortuitously saved after the life was sucked right out of them.

The story:

An economics professor was walking down the street with one of his students to a local café for lunch. Along the way, as he was explaining the concept of market efficiency to his student, the professor stepped right on a $100 bill and continued to stroll on. The student, who was looking down in studious thought at the time, was amazed at his good fortune and picked it up. As the student rushed to catch up with the professor, he asked the professor whether he had seen the $100 bill. The professor quipped, "My dear lad, haven't you been listening to anything I have been saying about efficient markets? Although I saw the $100 bill, I knew my eyes must have been deceiving me. Efficient markets theory dictates that it couldn't possibly be there because if it had been, someone else would have already picked it up."

The railroads, Asian and European bonds, dot-coms, real estate, and subprime mortgages were all economic bubbles. So what’s next? The U.S debt situation.

The solution to the U.S. economy is this current financial crisis. We have to go through a long recession in order to right the wrong that the U.S. government has created. The U.S. has to go back and become a producing and saving nation rather than a borrowing and spending nation. That is the only way to curb the U.S. debt situation.