The Blog of auroraborealis

Bush is correct, the bailout is needed.    Gramm is wrong about the recession, but he is right about one thing, we are a nation of whiners.   Yes, we are in a recession, yes that is hard on a lot of people, but all of us are responsible for this mess and all of us need to suck it up and help clean it up.    This problem didn't start with Bush, it started with Clinton when he signed the bill into law that started deregulating the banks,    (Bet Hillary's kinda glad she's not the nominee now...   that coulda been kinda awkward if it came up in the debate tonight...).   so the Clinton and the people who voted for Clinton are partly responsible.     Bush, in his almost eight years in office did nothing to stop the problem.    So Bush and the people who voted for bush are partly responsible.    Our type of government involves the participation of it's citizens, so if you didn't vote you are partly responsible (and if you don't vote, why don't you go live in China where you belong!).    If you took out a mortgage that you couldn't afford, you are partly responsible, if you read about the housing bubble that was going to burst and didn't write to your Congressman expressing your concern, you are partly responsible.    If you didn't even know that there was a housing bubble that could burst because you don't keep up with the news, you are partly responsible.     There,  I think I've pointed a finger at pretty much everyone.   The fact of the matter is that for the last several years this country has amassed an enormous amount of wealth that has been based on little to nothing, and now the bill has come due.    Yes, it's unfortunate, there are so many better uses for that money, but the financial institutions aren't bailed out, a catastrophic collapse of the world markets could continue.   Since 1971 the US dollar is only backed by our good name, and if our markets collapse, our name is mud and our currency is worthless.    There is little to no chance that America would be able to get out of this one as a superpower.

The bailout is not about buying up worthless paper--it's about buying up mortage bundles that contain bad mortgages.    The Government will then own those mortagages and can slowly resell them into the market as it stabilizes.    The problem with the House Republican plan is that if they only insure the mortgages and not buy them outright and the markets don't stabilize and the US goes into a depression, as more and more mortgages go bad the government has to pay out more and more money, this could cause more panic about the US Government going bankrupt and further destabilize the markets.   An outright buyout has the best chance of stabilizing the markets, and there is good reason to believe that it will work.    What drives the markets is not money, but human emotion--if people feel good about the markets they go up, if they feel bad about them they go down.     The 700 billion is designed to get some bad paper rolled up into mortgage bundles off the market to calm people's nerves, free up the credit markets, and get things rolling again.   In the best possible scenario, the government could actually stand to make money off this bailout.   Probably not the likely scenario, but it is possible.

Regardless, we as Americans need to stand behind this.   We need to bite the bullet and accept that we finally have to pay the price for our empty economy.