Posts Tagged ‘bank bailout’
It’s going to be 6-9 months before things start moving into recovery, and they are going to get much worse over the next 3 months. And that is a best case scenario. Why is this recession going to be so long and so severe? Simple, we denied it was happening for almost an entire year!
Remember, according to our government our economy was fundamentally strong just 3 months ago. That wasn’t the case then. That wasn’t even the case a year ago.
Recessions are fairly simple to recover from if they are dealt with responsibly. Ignoring it for 12 months just dug us a deeper hole. It would be like ignoring a broken leg for 12 months. Your leg would take longer to heal and would probably heal incorrectly (i.e. via $700 billion government bailout = $15 billion automobile industry bailout).
Here’s an idea for the government bailout program that the vast majority of Americans don’t support. Give us an opt out clause on our taxes for the next 10 years.
Now, I’m not talking about opting out of our taxes. Those of us who don’t support the bailout will still have to pay our taxes as usual. However, we can opt out of our tax dollars being used to fund this ridiculous scam.
If you limit the government’s availability of funds, they can’t be as spendthrift as they have been. If they want to come up with $700 billion to spend on some useless bailout, they will need to get it from some other source than the American taxpayer.
Years ago, this would not have been possible. However, with technology today, this is entirely possible. In fact, we could give taxpayers the ability to opt out of any irresponsible government spending. It would really make it simple for the government to determine how much they can waste on pointless bailouts like the automobile industry bailout. If 60% of Americans don’t support the automobile bailout then they will only have access to 40% of the taxpayer funds.
This would make budgeting for the government much easier! Taxpayers don’t support something, Congress can’t just go spend the money whenever and wherever they want. I suspect that we could balance the budget within 4-5 years and keep it balanced indefinitely with a bailout opt out clause. In fact, I suspect the government would end up with considerable surpluses as government waste would now have a true checks and balance system in place. The total tax dollars collected would be the same, but the ability for Congress to spend would drop considerably.
Now, some might argue that this would create serious problems with because the funding for the bailout is something that is “necessary” to avoid a greater economic downturn or because it is something the public doesn’t understand the importance of. I have two words December 2007.
I keep hearing about how the Bush Administration and Congress don’t want the auto industry to fail. They don’t want the banking industry to fail. Yet most entrepreneurs will tell you that they’ve learned more from when they failed than when they succeeded. I’m betting that banks would learn more from failing than from getting bailed out.
There is something humbling about failure. There are so many lessons that come with failure. Perhaps the biggest is that we can recover. We can rebuild. We have it within our capacity to go beyond what we have failed at. That is the biggest life lesson we can ever learn, and I think it would behoove our Congress and President to let some of these businesses learn these valuable lessons.
First, they really expected a Bush supported emergency bank bailout plan to just walk down the isles in the House. I’m sorry, but hasn’t the Bush administration been talking about the strength of the economy for the last several months? Years even? Given that they had their heads up their asses or were completely lying about the situation, why should be believe in any urgency about the bailout. Seeing as how they were completely wrong about the state of the economy for at least the last 18 months (the largest bank in the world – WAMU – doesn’t fail overnight folks), why are they suddenly right about the economy?
Then, this morning I read this article about a large slide in the manufacturing index. This should have been a no-brainer. If businesses can’t get money from their banks, they tap their other resource for capital: inventory. It’s a pretty simple business concept. Sell inventory and turn it into cash. Most businesses that sell products operate like this. Somehow, this is a foreign concept to the folks on Wall Street? Of course, in normal economic conditions businesses reinvest that revenue back into inventory. But if your bank is holding you by the gonads, you don’t buy more inventory. You keep the cash.
Good thing the fundamentals of our economy are strong.
I’m just saying…
Sure, he wants to clean up Wall Street, but the fundamentals of the economy are strong? Really?
That’s like saying the fundamentals of your small business is doing just fine right after your QuickBooks database got corrupt and you don’t have a backup since 2004.