Why the Bailout will fail - an editorial

[dc dalton]

From my blog:

While Washington touts this joke of a bail out that rewards Wall Street pirates for their misdeeds most people (including all the main street media talking heads and the so-called economists) have overlooked the whole problem with this bailout and the ONE reason it WILL fail. Lending practices have now fallen back to the 1970s! What does that mean? Simply put it means that banks now see their lax lending practices along with the federal laws that pushed lenders to ease their standards are now GONE! From now on its back to 20% down and perfect credit to have a banker even talk to you, unless you feel like paying 20% interest. The housing "boom" that was created by these outrageous lending practices will die a slow and painful death along with the overly inflated prices of homes. People that couldn't afford their house to begin with and some of those poor slobs that have been caught up in job losses will continue to be hurt and lose their horses while others that see the overinflated price of their home drop like rock off a cliff will continue to give their homes back to their lenders.

In this deranged version of Reaganomics Washington has once again decided that trickle down economics is the answer, bail out the big boys and they will run through the streets telling the borrowing public "we love you and want to lend you money again" when in fact the exact opposite must and WILL happen. Bankers aren't stupid and way too many board members jobs are on the line. They are going to tighten up lending like never before, and rightly so. But these yahoos in Washington seem to think money will start flowing to the consumer like cheap rum in the Caribbean and plain and simple it WILL NOT HAPPEN!

Consumers will continue to cut back for several reasons, they are still paying record prices for fuel, food prices are still high and they are scared to death they will lose everything and to be quite honest I cant blame them for cutting back. But what does this mean to the US economy? Well you may not know it but 70% of the US GDP (gross domestic product) is consumer spending. Yup, you heard that right .. 70%. To make matters worse the "good times" that have happened over the past years and the reason the US economy SEEMED so strong was again consumer lending. From wide screen TVs, cars and just about anything you can imagine the almighty credit card and loan was behind the surge in consumer spending. So lets retract that spending by 50%. Now the US GDP HAS to retract by 35%, something that will weigh heavily on both Wall Street and Main street. Add to that the fact we are just weeks away from heating season. With oil still hovering at record prices people will now have to contend with the decision of eating, heating their home or paying their mortgage ... which one do you think they will let slip?

Lastly (and something most Americans don't get) is the fact the US dollar will suffer horrible losses with the infusion of all this bail out money from the FED. Remember, this money DOES NOT EXIST. It must be created to bail these firms out. As with anything else the more there is the less it is worth. I expect the US dollar to nosedive back into the low 70s within a month of this new infusion of cash. So what's the problem with that? Well a lower dollar means higher commodity prices, namely gold, silver, wheat and most of all oil! See the "catch 22" there? The more they "pump and dump" money into the system the more it effects consumer prices, the more consumers pull back or have to make "tough decisions" the worse the economy suffers. Its a no win situation!

So all hail Washington's bold bail out, then wake up and head for the hills because YOUR livelihood, your ability to feed your family and your ability to survive day to day is being flushed down the toilet.

[sluggie24]

I have full confidence that DC will run this country into the ground all the time pointing the finger at anyone else within pointing distance.

The only up side I see is that the citizens may just get mad enough to finally take the country back.

[dc dalton]

I have full confidence that DC will run this country into the ground all the time pointing the finger at anyone else within pointing distance.

OK Mr. whizkid economist .. what hidden gremlins do you blame for this mess? I have blamed the Wall street thieves, the people that borrowed more than they could EVER pay back and the powers that be because they KNEW this would happen. So who outside this myriad of idiots do you blame and how will you turn this reality into YOUR solution?

Wake up bud .. the facts are right in front of you

[sluggie24]

OK Mr. whizkid economist .. what hidden gremlins do you blame for this mess? I have blamed the Wall street thieves, the people that borrowed more than they could EVER pay back and the powers that be because they KNEW this would happen. So who outside this myriad of idiots do you blame and how will you turn this reality into YOUR solution?

Wake up bud .. the facts are right in front of you

Didn't you know that banks have been mandated/forced/required to issue sub prime mortgages for the past 2 decades by acts of Congress?

Maybe you had better be the one to wake up and look at the facts.

[dc dalton]

Didn't you know that banks have been mandated/forced/required to issue sub prime mortgages for the past 2 decades by acts of Congress?

Maybe you had better be the one to wake up and look at the facts.

You should try reading the whole thing before you make comments then, the statement was right there in front of you:

Simply put it means that banks now see their lax lending practices along with the federal laws that pushed lenders to ease their standards are now GONE!

[adymond]

By DC I think he meant Washington, DC. Not DC Dalton. Am I wrong?

It sounds like you are both riled up over the same things.

[dc dalton]

By DC I think he meant Washington, DC. Not DC Dalton. Am I wrong?

It sounds like you are both riled up over the same things.

Crap you know what, you are right ... I misread it

Sorry sluggie24 ... was bleary eyed and ready for bed when I responded, my bad!

[adymond]

Crap you know what, you are right ... I misread it

Sorry sluggie24 ... was bleary eyed and ready for bed when I responded, my bad!

Well Sluggie didn't really help things by arguing with you without clearing up the misunderstanding. It was pretty funny though reading it.

Now you two kiss and make up. Maybe we can get Dr. Phill to help you two come to an understanding.

[Pector55]

Lesson learned here. We have to be careful because it's easy to call Washington D.C. lots of ugly names. LOL

[dc dalton]

Lesson learned here. We have to be careful because it's easy to call Washington D.C. lots of ugly names. LOL

Guess I should change my user name to something like "belligerent old fart" or something that's not so easy to confuse with that cesspool just south of us!