Tuesday, November 25, 2008

Paulson: It's "naive" to Think $700B Would be Enough

What does the government do when a $700-Billion bail-out isn't working? It tries an $800-Billion bail-out, of course.

This morning, the U.S. Department of the Treasury and the Federal Reserve announced plans to squander another $800-Billion of taxpayers' money "to make it easier for households to borrow money for cars, tuition bills and new homes", the Washington Post reports. Did they forget flat-screen TVs?

The latest spending spree "is largely separate from the $700 billion Troubled Asset Relief Program, administered by the Treasury Department" although it "is partially backed by $20 billion from the TARP", says the Post.

Speaking at a news conference this morning, Treasury Secretary Henry Paulson called it "naive" to think that the $700-Billion bail-out would be enough to solve the so-called financial crisis. Duh.

According to Mr. Paulson, the purpose of the new deck-chair arrangement is to coax lending back to "normal" levels.

This is nuts. Profligacy has become normal, and that's the problem. The problems triggered by fostering the notion that people are entitled to things they can't afford will not be solved by plundering the taxpayers in order to provide more credit so that people can continue buying things they cannot afford.

2 comments:

Ahmaud said...

I think this credit crunch is, in many ways, a blessing in disguise. We are now forced to live within our means, to plan accordingly, save, and hopefully make sound reasoned judgments regarding our finances. We have a real chance to reverse the consumerist binge we've been on for the last several decades, but sadly we have a government that says "They're full! Feed them more!" While I'm not an economist and can't pretend to understand all the elements involved, it's relatively easy to see that rampant consumerism and a zeitgeist of entitlement has led us to this conclusion.

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