The Bailout

The bailout option may be the only option to save the US economy from resession

The bailout option may be the only option to save the US economy from resession

For weeks now there has been a crisis in the US financial market. Now look, I am no economist by any means but from what I remember in high school history class, the last major financial crisis in the US lead to the Great Depression. I’ve been reading various online publications about the bailout and they all seem to be saying the same thing.

A great number of large companies in the US are failing and in an attempt to salvage these companies’ pockets, the Treasury Department has been trying to overhaul the financial system. More and more companies need capital in order to save themselves from bankruptcy but it has been predicted that 750 to 1 000 banks will fail over the next few months.

The problem is that investors have no confidence in the US financial market so they are placing their stocks and bonds in more stable markets. What I am more interested in is the implications that this has for US president George Bush. His tenure as president is coming to an end, leaving McCain and Obama to duke it out for the coveted presidency.

If the financial market remains in tatters, this will be the legacy that Bush will leave behind along with the invasion of Iraq. No president wants to be remembered for leading the market to a recession. Perhaps this is one of the reasons that Bush is opting for the bailout even though the House had rejected the $ 700 billion that had been negotiated by Senate leaders of both parties.

The crisis does not only affect the US but I will destabilise the world market. So bailout or no bailout, we’ll have to see if the decision to bailout will make any significant difference in the US financial market.

Advertisements

3 Comments

  1. Kele said,

    October 1, 2008 at 8:36 am

    I predict it won’t. America is the premier example of capitalism and consumerism on credit… which will lead, inevitably to failure. The evidence that Bush is an idiot started when he declared that “Wall Street got drunk”. Seriously, Google it, you’ll find a Youtube video. The only people whose intelligence is more in question is those who voted for him. They’re now paying the hefty price.

    The bailout will have to be paid off one way or another, and I predict the citizens will have an eye-opening tax increase to pay the amount. It’s just a short term solution. What’s needed is an altogether different approach to finance and spending habits. Consumerism, as we see here, has consumed the nation.

  2. October 1, 2008 at 5:44 pm

    I think what solodified his credibility as a powerful leader was his decision to invade Iraq. The people of America were in dire need of someone who was powerful enough to ward off the enemy and he did so by instiling fear of terrorism in them. Yes I agree once taxes increase the citzens will feel the pintch.

  3. brandanne said,

    October 1, 2008 at 7:41 pm

    And I wonder what ripple-effect this will have on South Africa. Remember that old saying, ‘when Wall Street sneezes, the world catches a cold’. I think we’re going to have to dress warmly.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: