Are the bailout efforts working?
For 5 sessions, the stock market has been up. Citibank stock, which was faltering, has seen a significant price improvement (disclosure: I’m a Citibank stockholder). Has the government’s recent actions restored some confidence to a beleaguered economy? It would seem so.
The improvement in the stock market has been broad based and has increased the stock prices of even the most beaten down stocks like AIG and Fannie Mae. As I mentioned in an earlier post, the psychology needed to turn around our economic woes, is just as important as the actual economic stimulus. With confidence and liquid credit markets, we might begin to climb out of the abyss.
New aid on a case-by-case basis
There will surely be more to come beyond what we are expecting with help for the banks, and a possible bailout of the Big 3. The government has hinted that there could be other Citibank and AIG bailouts, something that will be decided on a case-by-case basis. A macro-economic view will be taken and the impact on the entire economy will be assessed.
As Tony Fratto, the deputy White House press secretary stated several days ago; “We would never foreshadow any specific actions involving private firms, but I think it’s safe to say … that we take threats to our financial system seriously and we stand ready to take any steps necessary to prevent systemic events in our economy.”
President Bush added; “We will safeguard the financial system as the first step necessary for economic recovery.” “This is a tough situation, but we will recover from it.”
Let’s put things into perspective
I heard Neil Cavuto make a sensible contrast in an interview the other day. He was passing a store in New York and saw the long line for the new Blackberry Storm. He pointed out that any comparisons to our current situation and the Great Depression are unfounded. He reminded people that during the Depression, people stood in long breadlines. He passed a long line of people waiting to spend big bucks for the newest tech gadget. This is a good way to put things into perspective.
If the newest incarnation of the bailout is successful putting more money in people’s pockets for student loans, mortgages and car loans, then we are moving in the right direction. Students can continue to matriculate, people will be able to enter the housing market and auto sales will help support that segment of the economy. There is a method to the madness.
November 29th, 2008 at 11:19 pm
[...] Some signs the bailout is beginning to work If the newest incarnation of the bailout is successful putting more money in people’s pockets for student loans, mortgages and car loans, then we are moving in the right direction. Students can continue to matriculate, people will be … [...]
December 2nd, 2008 at 10:29 pm
Instead of the government bailing corporate America out, they should use those Billions of dollars, divide them up, and distribute them to the people of The United States. Recession fixed.
December 7th, 2008 at 5:14 pm
I agree with Kurtiss to some extent, there are approxmately 150 million families in the US…Honestly I have not seen any help from recent bail out attempts and am not sure where to look to see an impact. Call it a tax break or individual bail out no matter…give each family a piece of the bail out because irregardless of how much money is given to big business USA the average “Joe” can not afford to buy a car, house, yacht :)etc…bottom line the folks in trouble with their mortage even though the government bails out the mortgage lenders which gives the lender more resources to pursue foreclosures and ultimately puts more people on the street…I propose giving each family a sum of money we’ll say 100k…stipulations placed on the bail out, tax break whatever you call it:
1. Catch up on mortgage/pay off
2. Pay off creditors, i.e..car loans, old navy etc…
3. If any left put the remainder in the bank
The remainder can be “infused” to the economy so CEOs can go on trips and fly their jets….
“Joe Idea”
December 12th, 2008 at 2:00 am
I JUST DON’T UNDERSTAND, WHY IS IT THAT WE’RE BAILING THESE
BIG COMPANIES OUT AFTER THE TOP EXECS MADE PROFITS FROM
OUR SWEAT & SACRIFICES. AFTER ALL ISN’T IT OUR TAXES THAT’LL
BE PAYING FOR ALL THIS? WHY ARE’NT THEY BAILING OUT THE AMERICAN PEOPLE WHO HAVE BILLS TO PAY, THAT IS NO WHERE NEAR WHAT THESE BIG COMPANIES HAVE. IF YOU WERE TO GIVE
10,000.00 TO EACH AMERICAN, WHICH IS 400,000,000 PEOPLE
OUT OF 1 BILLION DOLLARS ONLY, WITH A CONDITION THAT IT HAS TO BE USED TO PAY THEIR DEBTS, ALOT OF THAT MONEY WILL GO BACK INTO THE ECONOMY, AND THERE WILL BE STILL ENOUGH
BILLIONS TO BAILOUT THE BIG COMPANIES. AFTER ALL ITS THE TAX
PAYERS MONEY THAT’LL BE USED TO DO THIS, WHAT ABOUT OUR SAY???? THINK ABOUT IT………………………………………………………….
December 14th, 2008 at 6:47 pm
The bailout cannot pass due to the legal lines it has already crossed. The damage to the economy will only continue to get worse.
Sincerely,
Ilya Bodner
bailoutopinion.com