Well, in theory, we all spend the money, which is something the Treasury has proven unwilling or unable to do, shockingly enough.
It’s not a bad idea, in a way; short term economic boosts work pretty well.
It’s a horrible, horrible idea in another way, because our deficit is whopping enough already.
Well banks can call in their loans for a variety of reasons. If they’re strapped for cash or you’ve defaulted on your repayment schedule or the bank’s written in another contractural reason why they’re allowed to, then they can. That doesn’t mean they’ll do it for shits and giggles. It’s much better to just sit back and collect the interest. But it can be done.
The “bank” I’m referring to here, however, is another national government. Their loans work the same way and, yeah, they can demand payment in full when they so choose. It’s just (right now) not in their best interest to do so.
I’m sorry, but I fail to see how that’s relevant. Where, exactly, does it say that Geithner’s the one who came up with this idea or that he has the authority to not make the payouts if directed to by Bernanke, if he disagrees with Bernanke?
Not even by half. Vastly increasing federal spending is the only way to get the economy going again. We need to add $1-3 trillion over the next 3 years to get out of this mess. This is no time to cut spending, or watch deficits. Yes, when things are stabilized, we will all pay higher taxes, for at least a generation or two. But cutting spending, or balancing the budget will not avoid that; it will only prolong the disaster we are facing. We cannot avoid the shitstorm we created for ourselves, we can only hope to make it somewhat shorter by massive federal spending now, and higher taxes for a long time.
There is no easy way. Sorry.
That may well be, Fear, but I’ve seen no evidence that simply handing the money over to the banks will fix the problem. It still seems better to spend the money on things like infrastructure.
We poured money into huge financial institutions ,presumably to heal the credit crisis. It did not happen. The money was gobbled up to be never seen again. The idea is to start public projects now. That will actually put money into the hands of people who spend.
Another idea is to redo mortgages. The foreclosures are growing and growing. We have to stop them. Suggestions have been for 50 year mortgages, reevaluating houses downward to reflect their real value or to rewrite some of the balloons. I hope they do the job.
The financial pros on CNBC are acting very scared right now.
Oh, I agree. It should go straight to the consumers, and let it trickle up. Efficient companies will prosper, bloated parasites will wither and die.
I was addressing the theory that we should not increase spending.
Isn’t a big part of this “$10 Trillion” the insurance for the money market funds?
My understanding is that these are not handouts, they are loans and/or investments in companies to keep them afloat. The government expects to get the vast majority of this money back.
We have met the enemy and he is us! (attributed to Pogo)
Come on. If he thinks this is a bad thing, and continues to do it without resigning, then that’s even worse. We’re not talking about some minor policy here, but trillions of dollars.
Actually, this is one of my big problems with the bailout- it’s being opposed by both parties AND supported by members of both parties. Bipartisan support (or resistance) in Congress for anything is generally a pretty good indication that nobody has any idea what the hell they’re doing.
You are comfortable about the government lying to you I see. Saying that they will get it back ,is to insure that the people back up the plan. I see no mechanism in place to get it back. We were supposed to buy up the bad mortgages. Paulson decided not to. It is a cash influx for the banks to control. We can not even force them to start lending.
I haven’t read anything regarding Barack Obama’s reaction to this latest proposal, but in my lifetime in this country, my experience has been that the Democratic Party wants costly government programs and is willing to raise the revenue to pay for them, whereas the Republican Party wants to spend the money without raising the revenue to cover the expenses. It could be that Barack Obama will look at ways of reducing the deficit which is what the OP seems to be concerned about.
No, they can’t.
Stop spouting bullshit.
China can stop buying new debt as the old debt comes due, which would be just as catastrophic.
One could say the same thing about Colin Powell and Iraq. Additionally, Geithner saying, “Fuck it, I’m out of here!” could screw up the transition process to the next administration. We have no idea if he’s going to be liberally cutting checks, or dragging his feet to delay the process until he gets in charge and can quietly kill the program.
I think the liars are the people writing these alarmist articles that group together different plans with vastly different amounts of risk involved. A loan to citibank = risky. Commercial paper = somewhat risky. Money market fund insurance = very low risk. Yet these articles add up the sums, and then pretend it’s likely that it will all go to $0. If this $10 trillion goes to $0, there will be no government, so might as well just buy a cabin now if you think that’s likely.
Could this trigger hyperinflation of the US dollar?
One would expect, then, that the budget would be more likely to be balanced when Democrats controlled Congress. Since, after all, all spending bills originate in the House. The US budget was balanced in 1969, and 1998-2000. Which party was in control of Congress then? Since 2006, the deficit, which was decreasing, has increased by quite a bit. Which party was in control of Congress during that period?
Could be. He said he was going to cut spending overall during the debates. I didn’t believe him for a split second, but perhaps I was wrong.
He claimed he was going to cut taxes overall (cite). Now he has gone further - he claims he isn’t going to raise anybody’s taxes.
If he, like other Democrats, wants “costly government programs” but isn’t going to raise taxes - on anyone, contrary to his promises during the election campaign - how is he going to pay for them? And how is he going to reduce the deficit with more spending and no tax increases?
So Obama seems to be going against your experience. He is going to keep the tax cuts and increase spending.
This is different from Bush - how, exactly?