Tuesday, September 30, 2008

Current Bailout, and why it's bad...

Please read the link to John Hussman's post about the recent "failed" legislation that did not pass in the House. It's a simple as this, really...please read the link below.

The bailout will NOT prevent the recession. It's an election year, which prevents the general public from getting real information. If you want to rise above the masses and understand the bailout in its original form, click the links below. The package puts the taxpayers on the hook, and absolutely encourages future "irresponsible behavior". If you don't believe me, or Dr. Hussman, there's a link to lots of economists that signed a petition against the bailout.

The proposal will not solve anything. Taxpayers should not be on the hook to bail out debt holders in a company's capital structure. From a relative perspective, our generation has lived on credit, and now free markets are telling us we can't live like this going forward. If you can't afford a house, you shouldn't be allowed to buy one. It's that simple. Local banks took regional risk by originating loans that were bogus, and took this regional, localized risk and transformed it into a systemic risk. We are all now caught in the downdraft; price discovery of distressed assets is painful, disruptive but necessary. It's like an alcoholic going through detox.

Link to John Hussman's Post

Link to Economists Petition Against Bailout Presented in House