With a tremulous week that was, we have come back to a situation wherein regulations and interventions are being sought to calm down the situations. As all of you would have known by now, the $700 billion bail out program by the Government is a measure taken to bring the situation under control and to ensure that it is insured against such a downfall in the future. So how would the $700 billion cleaning plan help the economy? would such a program ensure that the economy would be resurrected?
In my view this should not happen, yes it is good for economies around the world, but then whats the punishment for all the wrong decisions that these companies took in investing in JUNK instruments and leveraging their capital absurd number of times? What happens to the companies who did good business and survived this situation on their own without even entering in to this mess? Its like this, you cry more you get what ever you want in spite of the mistakes you did. Not Fair. Evolution should take its own course, that is survival of the fittest. Don’t you think there is a big shift happening from capitalist to a socialist!
Bottom line ” Privatization of profits and make all the losses PUBLIC”
Every sector should come and lobby with the good government to bail them out, its after all bad decision and bad management of business which put them in loss….airlines are you listening!
So what is the plan with the $700 billion? The most obvious one, the Government buys out the distressed assets and tries selling them during better times. Now with what the economy needs is a lot of capital and with the capitals flowing the investors might ease a little and the investments would help in making the situation better….that sums up the plan in brief!
The bail out plan might prove to be a rescuer. Now with lot of lobbying and representations to the government and the Fed, it looks like the asset buying scheme of the Government would also include insurance companies. It would also include foreign banks. Now that is quite natural with the foreign banks engaging the United States capital and lab our resources.
As you can see the above said situations would act as a ‘cycle’ by itself wherein the bail out plan would bring about confidence in many including the investors and the investment banks changing their role would mean greater confidence in the investors and the public and hence capital flow which in-turn would ease the credit crunch and the capital crunch that the economy is facing.
In short what the ‘Capitalist’ requires is lot of ‘CAPITAL’