Saturday, February 7, 2009

Bailout Rush

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I do not believe in any bailout. For me recessional is a process of natural selection when: those companies who lie about their stability and profitability have to die because the truth is revealed; those companies that have produced uncompetitive product and oversupplied market with useless stuff have to die because they become too fat and too slow. When you bailout these companies you are breaking the order of natural market flow when economy corrects itself in recession. This is why recession is needed - to kill and destroy the old spoiled corrupted and lazy monsters, so economy may move forward again. If you bail them out they will continue to destroy the economy, still they will die later by bringing more harm than it would be now. If you bail them out new businesses will not be born because old monsters are still alive and they are still hungry.

The purpose of the recession is too clean the economy from parasites. Yes, the current recession is very strong and very scary and this is because the parasites are very big and are in the core of the economy - in the financial system. If you continue to feed them they will not be changed into good bacteria they will grow and they will demand more and more food.

We had several bailouts in January 2008 and it was under the umbrella that it has to be done to save the economy and protect people. Yet, we still had crash in fall 2008. Then another bailout was sold to us that should save us all. Half of this bailout is already spent and we still where we were. Now we are told that we need another huge bailout... I'm just trying to image what would happened if none was bailed out in the first place and those bailout money would be invested directly into building, for instance, of plants for batteries for electric cars (30 of such plants in China and zero in USA) or building a wind, solar and nuclear power plants or in oil drilling... If it would be done a year ago instead of the first bailouts wouldn't it created new jobs and slowed down the recession? But it was not done because the old government was weak and future government (current) had interest in the economy crash and did whatever it took to make the recession as bad as possible - it guaranteed them the victory...

But this is all past. What is now? Why do we need another bailout ("Stimulus Plan") when the second half of the previous bailout ("Rescue Plan") is not spent yet? Why in rush to borrow again? Is it because tomorrow we may discover that we do not need them at all? There is no question that with all the money left from previous "rescue plan" and money from new "Stimulus Plan" the new government will be able to create jobs within the next two years and will look like a heroic government. But what is going to happen in two years when the money is gone? New bailout or new crash, even worthier then the recent? Sooner or later the borrowed money will hunt us down.

On my opinion there should be changes in the regulation of the Wall Street, in the regulation of the financial institution and regulation in the government spending. Until then, pumping money into the economy is just wasteful feeding spoiled monsters...

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