Last week I wrote about the possible bailout of the automakers, but now it is Citi! According to reuters.com, "The Treasury Department will get $24 billion of preferred shares and the FDIC $3 billion. Of the combined amount, $7 billion constitutes a fee for the government guarantees. The government will also receive warrants to buy $2.7 billion of common stock, comprising about 254 million shares at $10.61 each." Remember what I said about the government going to buy company stock? That means our government will be able to vote on company issues since they are now a shareholder. Bye bye free market! The article says it is only temporary... Ummm sure...
Because of the bad investment decisions and bad management, Citi has made its own bed. One thing I don't quite understand how does the government pick and choose who they want to help? Wamu didn't cut it, IndyMac didn't cut it, but AIG did and so did Citi. I would love to see the list of qualifications.
I don't see how people can think that throwing money at the problem will fix it! Obama and fellow democrats are suggesting a stimilus package that could exceed the $700 billion bailout. According to FT.com, "Chuck Schumer, a leading Democratic senator, predicted it could be as much as $500bn-$700bn. “It’s a little like having a new New Deal, but you have to do it before the Depression. Not after." Wait... can you believe it... I am not done. According to Bloomberg.com, our government is prepared to lend up to $7.4 trillion, that's $7,400,000,000,000 (if you didn't catch that), to rescue the financial markets!
President-elect Obama has said that he is considering a 2 year delay in any new taxes! On the service that seems like a noble thing, until you focus on the two words, "new taxes." Here is one of the significant differences between being a democrat and true republican (not a RINO, which stands for Republican In Name Only). When our economy slips, as it has, Democrats want to raise taxes or keep taxes how they are. Then a true conservative Republican's response is, "We need to cut taxes, all of them" just as Republicans in Congress have said.
The president-elect also has said that he would create 2.5 million jobs in investment in infrastructure, public service, and green technology. All of those jobs are government jobs. Who pays for all of those jobs? You and I, the taxpayer. Our government bureaucracy will be even bigger! I think John Boehner, House minority leader said it best,“I don’t think we want to empower government here and keep bureaucrats employed."
More spending, bigger government isn't the answer. We are hearing the comparisons to the Great Depression and how the government needs to respond. Just last month, two UCLA economists did a study that showed that FDR's actions caused the Great Depression to last 7 years longer than it had to. That is just something to think about.
Posts
3 comments:
Okay, I am so fed up with this bailout nonsense! But, here is my question...because I am not an expert...what would the conservative approach look like? I get the tax cutting that gives more money back to the people to spend and reenergize the economy and I get the letting companies that failed to actually fail, but I do have to wonder what that would look like in these cases. If Citi goes kaput...what exactly does that mean for us? I am all for short term pain for long term gain, if that is what is required to do this right. I hate the idea of the government being involved in this stuff...seeing as how its track record is nothing nice...but what about the companies that were forced to lend in unwise situations by the liberals who wanted everyone to buy a house even if they couldn't afford it? What is the "right" way to address those issues? I have to admit I am a little confused...and I think my rambling shows that! Help Justin...I need your input here! =)
Have a blessed Holiday.
Diane, here is my opinion. If Citi went kaput, the government would still need to insur the FDIC requirement... but Citi would be allowed to fail and the deposits would be taken over by other banks, just like what happened to IndyMac and Wamu and other smaller ones. I don't like how the gov't is playing favorites and picking and choosing different companies to bailout out, but then seizing other banks that hadn't even failed yet, just like Wamu. I don't believe that any company was forced to do subprime loans. There was a lot of profit in doing those loans... that was their motivation... There was high commissions paid to the loan officers who did them too!
I believe that each company should be allowed to fail, no matter what. Look at it this way. Let's say that you are driving a nice car (citi). Your transmission starts to turn bad, so your parents (the gov't) give you some money so you can flush the transmission fluid in hopes that it fixes the problem (the bailout). It will make your car run fine for awhile, but there is an underlying problem in your transmission that still makes it slips ever so often. You can either take more money and attempt to complete fix just the transmission or you can trade in your car and get a new one? If you take more money from your parents, your transmission will be fixed, but your driving habits (management style) don't change and soon you will have something else fail. Why don't you allow that car to fail and trade it in for a newer model? There is an updated driver's manual (new management), better gas mileage, better looks (better marketing), because the car is newer, your driving habits change because you don't want it to fall apart on you and you have a new drive and focus to be wiser with your decisions.
Sometimes things need to fail, even though there will be some casualties, to allow the system to continue running....
Post a Comment