Okay, there have been a lot of diaries of Kossacks celebrating the defeat of the "bailout." It is time for one that supports its passing.
This is not a bailout. If anyone thinks the gov't was trying to give $700bn away to Wall St. fatcats, man, are you wrong.
This was all about Main St.
Follow me below the fold.
First of all, no one wants to lend out money or extend credit. Banks don't know what another bank is worth, so they won't lend to them.
That will have profound effects on Main St. Businesses that need a short term loan can't get it. A student who needs a student loan may not get it. Cars, homes? Forget it.
If anyone is getting "bailed" out with this package, it's the homeowner who bought the house with the mortgage they could never afford. It is also important to remember, that that is a very small group. The overwhelming amount of mortgages- 94%- are performing loans, meaning payments are being made.
This package was to at least relieve that stall in the credit and bond markets.
The defeat as we can all see, has resulted in a massive selloff of stocks. The Volatility Index (VIX) is up almost 40% today to about 48. The highest its ever been since 2002. It generally is in the low 20's or high teens. That is an indication of fear in the market.
There is a panic....and when prices fall like this, it's a great time to buy.
Yup...go buy stocks and wait a couple of years.
Of course, who has the cash and the balls to do that?
Simple- all those very wealthy hedge fund people, and other fatcats who many on this board want to skin. They have billions on the sideline and the time to wait. Pick up RIMM for $65 a share; AAPL for $106...and so on. Even the NYSE itself- NYX was in the 90s a year ago, now it's at $34....and they have no debt problem! The NYSE is mostly a data services business these days. These are bargains people...bargains. (And yea, I know RIMM is Canadian.)
Who else is buying? Sovereign wealth funds. What are those? Stock portfolios that are owned by foriegn gov'ts. The Saudis, the Chinese, etc....they have hundreds of billions of dollars just sitting. Well, you can be sure they are buying up pieces of our economy right now as the stock prices fall.
So beyond the IRAs and 401(k)'s that are falling like a rock...remember that this is providing the extremely rich and wealthy foreign gov'ts to buy the USA on the cheap.