By now I'm sure most of you are aware of the current economic downturn in the United States that began to show itself at the end of 2007. 2009 is here and the problem still has not been fixed, leaving Americans scratching their heads in confusion. It would seem that the end of the Presidential race took the focus away from the economy as Obama Mania set in, and McCain supporters scrambled to catch up. There was a short burst in-between when McCain suspended his campaign to go help fix the economic downturn with bailout negotiations in Washington, but not only did that do little to no good, but it was made to look like the bailout would solve the country's problems, when it was really only sweeping our problems under the rug. What it really did was make investors look at how much free money was being given out 'just because the economy is bad' and make them beg like hungry dogs for the government to give them money to pull them out of the slump.
For one to understand exactly why our country is in a recession, you have to understand how the system works. Sure, we know the buying/selling of debt by banks and other financial institutions put them in the position they are/were in, but if you ask a normal American citizen on the street why our country is in a recession, you'll probably get a blank stare or a general statement about how money just wasn't well spent in some areas, or that the government just didn't act swiftly to rectify the economic situation. In some cases you may not get an answer at all. It's important to understand why the country is in such financial disarray so that once it's fixed we can ensure it doesn't happen again.
The reason the bailout will fail is simple. Money isn't just created out of thin air. when the government says they're giving out free money to save an institution, such as Banks or Automakers, what they are saying is that they'll order newly printed money to supply those companies with. The money is ordered from the Federal Reserve. Don't be fooled by the name 'federal reserve', it is neither a financial institution, nor does it hold reserves of money. It is a private bank, the only private bank in the country allowed to print the country's money. Because it is a private bank, when the money is ordered the Federal Reserve treats it like a loan. for every dollar printed, an interest rate is applied and over time this amount must be paid back to the private owners of the federal reserve. That means that every single last dollar in the country automatically has debt attached to it. how does the government pay the loan back? Tax dollars of course!
the current bailout plan is aiming dangerously close to $7 Trillion, which means that when the federal reserve wants its money back, it will cost MORE than the original $7 trillion ordered to begin with, and YOU will have to pay for it with your tax dollars. what startles me is that no one in this country seems to care. Doesn't it bother you that companies are getting your hard earned dollars, and not just a small amount of it, but SEVEN TRILLION of it? It bothers me...it bothers me a LOT.
Most of the companies involved in the bailout are financial institutions that made bad financial decisions and as a result were forced to ask for money. The resulting economic downturn forced consumers to tighten their budget, forcing auto manufacturers to make massive layoffs (they aren't the only ones though, we're down several million jobs as of December 2008) and subsequently ask for money, for fear of complete collapse of their respective companies. If I don't pay my electric bill, the lights get cut off. If a small business owner can't make the payments on the lease, the shop gets closed down. You can't just appeal to the government to hand out taxpayer dollars to help you out "just because". These companies made terrible financial decisions, bought and sold debt, gave multi-million dollar bonuses to CEO's, flew in expensive private Jets and spent money all over the place. they couldn't sacrifice any ONE of those things, or at least adjust their budget from the approaching problems they must have foreseen?
Companies folding is how our system works. If you don't make enough money to pay the bills, you close shop. It's that simple. If you spend money unwisely, eventually it's going to catch up to you. This is the system flushing itself out, and needs to take place. the system is clogged and unable to clean itself now that the government has decided to bail out these companies, and supply the country with a stimulus package to keep these companies afloat. It's a temporary solution that needs closer examination and restructuring, and I'll tell you right now friends, it's going to be a HELL of a lot worse later on. When the country has fixed itself, the money is flowing freely, and everyone is finally happy, the reserve will call on you to return the trillions of dollars, plus interest, and it will come from your paycheck.
And who said the bailout was going swimmingly? Some aren't even disclosing how they are spending billions of your dollars already!. According to this article executives at Insurance giant AIG spent almost $500,000 dollars of the bailout money they received on a vacation to a spa in California! This is how your money is being spent, and the sad part is, you're not even doing anything about it. Doesn't that make you angry? If it doesn't, it should.
-The Chief
