Links to a CNN article from Ron Paul, former candidate for President.
"They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.…Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term."
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2 comments:
I commend you on your pluck in pursuing the goal of understanding our world...I gave up long ago, which, of course, explains the sarcasm and cynicism. I'm not to apathy yet, but I can see it around the bend...
We've had discussions about this for quite a while now. We've been afraid that a government bail out would prevent this drastic drop in housing prices, which we feel needs to happen. Every time I hear President Bush talk about how this will help the prices of homes increase in the next while, I cringe. It's kind of selfish of us, and I know it hurts those who purchased during the inflated season, but it seems it will affect far more in years to come. I don't think incomes can keep up with the cost of housing. If it's this crazy for us, what will it be like for our children...the way he describes it makes total sense.
"Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.
In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically
This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.
The government doesn't like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was."
I like the new look of your blog...and happy 40th to you!
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