June 20, 2011

The Era of Continuous Bailouts

POLITICS - The North American and European economy has entered an interesting stage... Greece is now in talks for a 2nd bailout package, the US economic recovery has been sloooooooow and Sarah Palin (who is foaming at the mouth at the possibility she might become president if Barack Obama doesn't get re-elected) won't commit on the question of whether she would do more stimulus money, a bailout if anything happens to the United States financial sector, or whether she would follow George W. Bush's example... and don't do anything about the economy, leave everything to the last minute and leave the crashed economy to the next guy.

When you consider that US banks basically ripped off taxpayers with a bailout (which in retrospect was unnecessary and only fuelled corporate bonuses) and ended up costing other industries hundreds of billions of dollars due to a crashed stock market (a crash based purely on wild speculation / fear tactics on the part of greedy bankers).

Forget about the sub prime mortgage crisis. That money evaporated and went to the people who sold their houses before the housing market collapsed. It was the foolish banks who were left on the hook and it was the foolish banks who should have paid the price. Not American taxpayers.

Instead the resulting bailout by George W. Bush at the end of his presidency was rushed into place using fear tactics that if the US Senate didn't approve the bailout the economy would collapse, there would be anarchy in the streets and the national guard would be called out to enforce the rule of law.

So the question becomes... when will the US government (and the taxpayers) get their money back???

Or will the US financial sector be back sometime in 2012 to ask for MORE money? Just in time for Barack Obama's re-election campaign.

At which point will Barack Obama refuse to play ball with greedy bankers who took America for a wild ride and ended up paying themselves huge bonuses? Or will he refuse, stand up for the American people and refuse to be swindled like Bush was?

Outside of the USA there are other countries which might also be looking at a 2nd bailout / stimulus packages for their failing economies... and there is a growing argument of...


If their economy is so bad they are basically on "international welfare", and they got there because of greedy bankers gambling with the local economy, then why should the international community bailout what is essentially a 'welfare country' and keep sending them money?

To use a metaphor, its like your cousin who is university... he is supposed to be studying hard, working a part time job, making ends meet. If he runs into trouble, okay, we send him some extra money to help him out.

But what happens when it turns out your cousin has been fuelling his gambling addiction the entire time, partying, spending all his money on booze, drugs and gambling... and he's slacking off on his studies and his job. Do you still keep sending him money?

Or do you refuse and say "Hey, maybe its time you smartened up and stopped gambling with your money? Because you won't get any more from me."?

Another metaphor would be a town which is becoming a Ghost Town, ie. Teeswater, Ontario. The local economy has collapsed. Most of the stores on main street are closed and boarded up. Nobody will buy the properties. Everyone is shopping in other towns with better stores. Should other nearby towns send Teeswater money to prop up its failing economy? No. Don't be ridiculous. The town is dead. Just let it die. Maybe it will become a tourist attraction in the future when its officially a ghost town.

Such is the case with the city of Detroit in Michigan. Its effectively become a "Ghost City". Many people have burnt their homes in attempts to collect the insurance money because nobody is buying. The local economy has completely collapsed. Even the drug dealers have left because there is no money to be had there.

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