Lilguy

The Economy Won't Be Ignored

I think this article highlights the context for opposing the proposed bailout of Wall Street.

The proposed legislation does not focus on the right problem. The critical underlying problem in our economy is the growing number of foreclosures and associated decline in the US real estate market. This bill will not address the core problem in any meaningful way.

The proposed legislation is inadequate to the task it is intended to tackle. Although $700 billion dollars is huge sum, the Treasury and Federal Reserve have already extended over a half-trillion dollars in direct aid or guarantees to Wall Street—and credit conditions have worsened.

The proposed legislation will not result in significantly expanded credit available from Wall Street to Main Street. Because of their huge leverage—20-30 times their capital—the banks will need virtually every sent to shore up their capital reserves. The half-trillion dollars already extended to Wall Street has accomplished nothing in easing credit conditions.

The proposed legislation will ultimately leave the US taxpayer with hundreds of billions of dollars in losses added to the national debt and our taxes. To make any sense at all in achieving its intended goal, Treasury will have to pay a premium for this toxic financial waste. The taxpayer will ultimately eat this waste no matter what warrants, equity, or other arrangements are introduced.

The additional national debt and taxation burden will come at a time when Americans will be in a substantial recession and least able to afford it.