Bailouts now, damn the consequences


When you’re standing in the midst of an economic storm, it’s hard to see more than a few feet in front of you. The actions officials take to stem a crisis can have deep and profound consequences in the long run, but at the time, they may seem absolutely necessary. Following the Dot-Com crash and the 2001 terrorist attacks, the Federal Reserve under Alan Greenspan slashed interest rates to keep the economy from slipping into a long and painful recession. By 2004, the short-term rate was hacked to just 1 per cent. As we all know now, the move inflated the massive debt bubble that triggered the current economic crisis. It’s a common refrain to say Greenspan kept rates “too low, too long.”

Well, today Greenspan’s successor, Ben Bernanke, threw his support behind a second massive bailout package. That would be on top of $3 trillion in other stimulus measures the U.S. alone has enacted over the last month. So are these prudent measures to stave off a grave financial calamity? Or too much, too fast?


Bailouts now, damn the consequences

  1. So are these prudent measures to stave off a grave financial calamity? Or too much, too fast?

    I have no expertise whatsoever regarding financial matters (you should see my current balance, makes Iceland look solvent), but I’m gonna guess… um… the first one? Say what you will about Bush and his appointees, but they’re nothing if not competent.

  2. “… a second massive bailout package … on top of $3 trillion in other stimulus measures …”

    It’s a lot worse than that. Or a lot better than that, if you believe that these people (a) are competent and (b) have the public’s interest at heart. US banks are borrowing 437.35 Billion *per day* from the Fed, which adds up to over 2 trillion *per week*.

    If that’s the case then are you surprised to hear that Canada’s banks – allegedly the soundest in the world … need “aid” so that they will “stay competitive”. Which I think is code for “make sure Canadians keep their place on the rocket sled to Hades”.

  3. I’d rather be near the front of any rocket ship, regardless where it’s going. You can’t just jump off a rocket ship whenever you please.

  4. The USA is punishing the unborn with insane indebtedness in order to avoid a well-deserved recession or depression now, relying on the insane theory that the next generation will work its way out of trouble with three limbs roped together instead of this generation’s two. The next entrants to the club will pay dearly to ensure the prosperity of the early entrants. A Ponzi scheme.

    And it’s all legal because the unborn do not vote, and because the legislative and executive branches have said so.

  5. Sorry, kids. My generation is screwing you over the way your grandparents screwed my generation over.

    Does Hallmark have a card for that?

  6. Does Hallmark have a card for that?

    “Get Well Never”?

  7. Nod then back away slowly before turning and running madly for cover. Is it wise during a credit fallout to be borrowing unprecedented amounts? Especially to loan money to failed institutions that may never pay it back? My wife lost a good job when her company folded but we both agreed that tax payers shouldn’t pay for business failures.

  8. Since when did it become absolutely imperative to never, EVER have a economic slowdown, recession or any other term you chose? My god, even marathon runners need to take a rest once in awhile….they don’t just run forever! If you keep pumping sugar and adrenaline into the runner to keep him/her going….eventually the result will be far more catastrophic than had you just taken a moment to rest after the first 26 miles.

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