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Is the bailout needed? Many economists say 'no'

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posted on Sep, 27 2008 @ 08:57 AM
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Is the bailout needed? Many economists say 'no'


www.mcclatchydc.com

WASHINGTON — A funny thing happened in the drafting of the largest-ever U.S. government intervention in the financial system. Lawmakers of all stripes mostly fell in line, but many of the nation's brightest economic minds are warning that the Wall Street bailout's a dangerous rush job.

President Bush and his Treasury secretary, former Goldman Sachs chief executive Henry Paulson, have warned of imminent economic collapse and another Great Depression if their rescue plan isn't passed immediately.

Is that true?

"It's more hype than real risk," said James K. Galbraith, a University of Texas economist and son of the late economic historian John Kenneth Galbraith. "A nasty recession is possible, but the bailout will not cure that. So it's mainly relevant to the financial industry."

The Paulson plan will get some bad assets off the balance sheets of troubled Wall Street institutions and commercial banks. That may help thaw the lending freeze.

But it wouldn't reduce the crush of homes in or near foreclosure, said Simon Johnson, a professor at the Massachusetts Institute of Technology. That's a problem that will surely grow worse if the U.S. economy enters recession, leading to greater job losses, which feed a vicious downward spiral of even more foreclosures and defaults on car loans and credit-card debt.
(visit the link for the full news article)




posted on Sep, 27 2008 @ 08:58 AM
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I keep telling ya we are being bamboozled... its just another giveaway for the already too wealthy for our own good crowd... its another hard right movement conservatism scam.

With or without the bailout the credit crunch will continue from all that I have read and more than anything it will increase inflation and keep wages stagnate. Coupled with high fuel costs the overall situition will start kicking even solid borrowers into default... if only because they won't be able to keep up.

Clean your wheelbarrels you'll need them to lug your money in to buy bread with if all of this continues.... remember what happened to Weimer Germany when they increased mark production and increased the national debt at the same time.

www.mcclatchydc.com
(visit the link for the full news article)



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