Thumbs down for Bush’s bailout

Until last week, it seemed that one only needed a couple of PhDs in monetary economics and finance to make head or tail of what was going on in financial markets. It now seems that a PhD in political science would come in useful, too.

But, firstly, should the US government be talking about committing $700bn of taxpayer funds to bail out the US banking system? The Archbishop of York, in a speech devoid of serious analysis, suggested yesterday that if this money could be found for the bankers, then money should be found to reduce poverty in Africa.

In fact, while the US government is making a commitment of $700bn, over time considerable value will be realised from the assets they buy and any losses will be much less than the headline figure.

Nevertheless, Bush’s plan is not the way to go about solving the current crisis. After all, this chapter opened when Freddie Mac and Fannie Mae – two institutions that were far too close to the government for their own good – went under. The US government will be creating another vehicle, which will be with us for the long term and under government control, full of poorly constructed financial instruments.

The President himself has said that we have to do whatever it takes to deal with the current crisis and then look at the underlying problems at a later date. As Ronald Reagan once said, the problem is that “government programmes, once launched, never disappear… a government bureau is the nearest thing to eternal life we will ever see on this earth”. Sixty-five years on, we are still suffering from President Roosevelt’s misguided response to the 1929 crash – part of which was the creation of Fannie Mae…

 
To see the full version of this Yorkshire Post article click here

Excellent post; at least someone is speaking sense about the credit crunch. One reason the free market has been so successful in so many places over so many years is because business enterprises are allowed to fail. If that ceases to happen then stasis and decline will follow.

Thumbs up from me for Bush. I suggest the issue is about people providing banking and mortgage services for people and not about profit solely.Yes mistakes have been made and the real unjust profiteers should perhaps be punished but not millions of poor people.I suggest that the free market has never actually been free in this country, the state has always had to pick up the bill for failure to provide for one’s future in the way of our social budget of some £100 billion or so.

Geoff, surely millions of poor people are going to be punished by being forced to $5000 extra tax to bail out some very rich bankers; this is a direct tranfer of wealth from the poor to the rich.

For Africa to crawl out of poverty, good governance must first all be realized. Otherwise all the efforts being done by different organisations will not achieve anything in the presence of dictators and corrupt leaders. On a positive note, it is important to point out that some countries (Botswana, Mozambique) are doing well in the area of good governance.

Excellent post; at least someone is speaking sense about the credit crunch. One reason the free market has been so successful in so many places over so many years is because business enterprises are allowed to fail. If that ceases to happen then stasis and decline will follow.

Thumbs up from me for Bush. I suggest the issue is about people providing banking and mortgage services for people and not about profit solely.Yes mistakes have been made and the real unjust profiteers should perhaps be punished but not millions of poor people.I suggest that the free market has never actually been free in this country, the state has always had to pick up the bill for failure to provide for one’s future in the way of our social budget of some £100 billion or so.

Geoff, surely millions of poor people are going to be punished by being forced to $5000 extra tax to bail out some very rich bankers; this is a direct tranfer of wealth from the poor to the rich.

For Africa to crawl out of poverty, good governance must first all be realized. Otherwise all the efforts being done by different organisations will not achieve anything in the presence of dictators and corrupt leaders. On a positive note, it is important to point out that some countries (Botswana, Mozambique) are doing well in the area of good governance.

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