Sabre, not to pick on you in particular, but since you mentioned it.
Im getting sorta fed up with the whole Great Depression analogy and that this is it all over again. Well its not. The great depression was the failure of deposit run banks not investment banks that and the run on the money, that is to say everyone at that time going and taking their money out which is not happening now. So the two events are drastically and historically different. It is, however, whats been thrown out there to instill a bit of fear if not a lot of it.
If you read the proposal H.R. 1434 or something like that, I dont remember the exact number now. It does not provide the protection against golden parachutes that everyone is lead to believe.
1. It states that if a institution that participates in the bailout fails they will not be able to deduct from their taxes any salary over $500k. Salary/Employee pay is a tax deductible item in corporate taxes.
2. It states that any bonuses and such already written into a contract will be honored. Well hello!! Every CEO, COO, etc that will participate in this bailout is currently under contract so they have done didly squat about no golden parachutes.
Also, read again, they say IF a institution fails after participating in the bail out. Does that not bother anyone? IF it fails!! I thought the purpose of the bailout was to prevent the failure. That tells me they are no more confident than anyone else this plan is actually going to do anything at all.
By all accounts the gov't gave no other consideration to any other rescue plan. It was lets take 700 Billion of the taxpayers money and save wall street. No consideration as to whether or not there were other option, no hearings of any value, nothing, just lets get 700 billion and bail them out.
As Quicklynx so correctly stated, its the biggest land grab in our nations history. You think McDonalds or Burger King are in the hamburger business? Think again, they are in the Real Estate business and they use fast food as a vehicle in which to do so, as are many other such businesses do.
I again come back to the point that they are operating on the premise this will free up the banks to start loaning money again, but there is no guarantee that they will. And if they dont what then? We are in the same mess just 700 BILLION more in debt.
Furthermore, if there is no immediate reform in lending practices we are just going to start the cycle all over again and if we leave the same business people in place what do you think you are going to get?
They have made this thing sound so friggin' dire that everyone things that the economy is going to implode tomorrow and that is not the case. Yes, there will be a short time of difficulty as everything corrects but it will pick back up in no time. Everyone is screaming about the lack of credit yet credit is just an outflow of the reserve printing money and have they stopped printing money? NOPE! So there is a current squeeze on credit and that is due in part to the proposed bailout and everyone that is waiting for their hand out so they can wipe their books clean. If there were no bailout talk I dont believe it would be any where near this and if there were no bailout plan, as the money the reserve prints and the big lenders funnel more money into the system, this would correct itself in short time.
Oh well, I guess we'll have to wait and see. The good news in this? Well if you are buying stock with your 401k or seperately, then there is a big sale on wall street right now with the NYSE down as it is, and its an even bigger sale if you consider we are down from a high of 14,100 points. So anything being bought now, once the market recovers is going to reap high rewards because it was bought so cheaply compared to what it was.
