Thursday, September 25, 2008

A Mega Rescue With A Golden Parachute

In the past 2 weeks, financial giants have been falling like dominoes.

Here are the fallen tiles...
Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and AIG.... and more are waiting in line for their turn to tumble if something is not done soon. If these giants collapse, the financial world might follow suit.

Now, the grand mama is coming to help. The US Treasury Secretary Henry Paulson said he has a great idea on how to save the world but that is going cost a lot. His US$700 bn plan is 'brilliant'. He is frantically trying to persuade the taxpayers to buy his idea by telling them "
Let me use your money to pay your debt and save everybody else!".

Aha! That's the mother of all bailout and he certainly has the support of Mr President, who has been urging the Congress to approve his bailout proposal. He admitted that the 'entire economy is in danger'.

Hear what the wise old man said when he explained that the $700 bn plan was needed to restore confidence in the market....

"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence."

Ya, right! I am so convinced now! Isn't he bringing nationalism into the USA when these financial engines are finally state-owned? This seems like a very desperate move coming from a very capitalist country.

Is Mr Paulson's 'panacea' really going to cure the ailing economy? Many don't agree.

There is significant opposition to the bailout package from the members of Congress and among economic commentators. They reckon that the rescue package is only a 'drop in the bucket' and that the US government is having a 'knee-jerk reaction'. Many doubt that the government has any idea of what to do with the money and find this analogous to begging for a 'blank cheque'.

I wonder if $700 billion will be enough. The US government has already forked out $300 bn for the earlier bailouts. That was probably the first instalment. Perhaps, the proposed $700bn is the second and many more are coming.

Some politicians are asking the government to wait till after the November presidential election before passing the bailout legislation. That seems like a good way to save the $700 bn for there is probably nothing left to save by then.

Would Bush be leaving behind a demon at the last leg of his Presidential term or is he preparing an antidote for Obama or Mc Cain? Only time will tell...

I can only hope that the giant golden parachute will ensure a soft landing for the current financial storm.

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