Not to say I didn’t warn everyone, but my worst fears are coming to pass in regards to this whole bailout situation. Remember when we were told that if the bailout didn’t pass by the end of that week, the whole financial system would collapse? Then President Bush came on the air and said we would buy up all these toxic assets that weren’t really worth anything right now, but we’ll probably be able to sell them and actually make a profit in a few years. Well, welcome to reality. Today Secretary of Treasury Paulson announced that the Troubled Asset Relief Program would no longer involve purchasing actual troubled assets. Uhhh . . . color me dumbfounded.
Perhaps we should have listened to those House Republicans. I thought at the time, and believe now that we were sold a fraudulent bill of goods, and its looking more and more like I was correct. Furthermore, it seems that all this cash that we have injected into the banking system, you know the cash that was supposed to free up lending so our credit markets didn’t spiral out of control, is indeed being hoarded by banks instead of loaning it to those who could use it. To add insult to injury, its even being reported that Paulson and the Treasury are going to loan American Express money to “bail” them out as well. This is beyond anything that I can even think of as a rational thought. How in the world are we going to bail out American Express, probably the least forgiving creditor in the entire world when it comes to their own debtors? Is American Express “too big to fail” too? Could someone please explain to me who isn’t “too big to fail”?
Prediction, within 6 months the Obama administration will come back to Congress and ask to extend that $750 Billion dollar bailout amount to even more. I am not usually an alarmist, but at this rate, we are staring at the complete disintegration of our current market-place right in the face. The only solution to this problem is to start letting companies fail. Would it hurt if the auto industry failed in this country? Hell yes it would, thousands would loose jobs. However, someone would come along, buy those assets and start building cars again under the Ford or GM name, and they’ll do it without the legacy pension costs and the extortionate labor costs (the big Three labor costs are about double of Toyota thanks to Unions) and they will succeed. That is what always happens. America, wake up!