Good afternoon. I just commented on Lewis Poretz's post about how it used to be so easy to figure out when mortgage interest rates were going to be lower. It was almost always when the stock market went down. Now, that's not always the case. It appears there are a number of variables at work these days.
The biggest one is our government's intervention in guaranteeing the buyback of mortgage backed securities and the toxic assets of banks. The numbers are staggering. To date, I believe it's at or near $1 trillion dollars in guarantees. Although all this has led to a nice uptick in our business, I still wonder if there's another shoe to drop.
Let's face it. I'm a free market guy. I know several smart financiers such as Warren Buffett were saying the government bailout had to be done. But if you look closer at why they were saying this, it appears they stand to profit hugely from this plan. Put another way, if this plan weren't put into effect, all these smart guys would lose their shirts! I'm not sure where I read this but I think it was by Paul Krugman, the columnist and noted economist for the New York Times. Not everyone is a fan of Paul but he stated that the government bailout probably wouldn't work and lifetimes of people would be paying for these follies.
What do you think? I think alot of us know there's still bad news out there that hasn't been disclosed. We also know that recovery isn't right around the corner. It begs the question what if we had just left everythign alone? Would we all have fallen off a cliff? Have a great day!
Paul McFadden
That's a very good question, Paul. And, I really don't have any other answer than, I honestly don't know. I'm not happy with the bailout, but would it have been worse without it? I don't like that my son will inherit this deficit. Nor do I like that I'm having to pay it. It's a bad situation all the way around.
We might have fallen off a cliff, but I really wonder who received or is receiving the biggest benefits from these bailouts...I'm thinking along the lines of Goldman Sachs and some banks
Thank you for this post. I am scared to death of the direction that we are going. How much money can we print? There will be an end and it isn't going to be pretty.
Mark: Thanks! I guess we'll see. The short term plan sounds good. I'm worried about the long term ramifications!
Stuart: Thank you. I believe you are absolutely right. Some of the biggest players in this mess somehow stand to benefit the most. Perhaps they should hve failed ala Lehman Brothers.
Heather: It appears most people aren't happy with the bailout. So is government really the answer? I wonder.
Interesting question at the end-makes you go hummmmmmm
Pat: Thanks! Perhaps everything will return to normal!
Probably true, but if all the smart guys just lose their shirts, the rest of society will lose their homes, cars, businesses, retirement funds, jobs, and more.
Unregulated free markets do not work. That's been proven throughout history -- railroads, steel, banks, etc.
Russel: You make some good points. The question is this. Isn't this happening now in spite of government intervention? It appears alot of people have lost everything and are in pretty bad shape. So how has the government helped? If you're saying we would be even worse off I might buy that. I just have to wonder. Thanks for your comment!