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BillSavings.com BlogBailout Plans Stalls, Some Question It's NecessityPosted By Frank
BillSavings.com Brief:
With the Bailout negotiations stalling, many wonder if the economy is resilient enough to get along without one.
Despite hours of negotiations and a supposedly “almost done” sentiment in the market and by the president, Republicans and Democrats can't seem to agree on how the bailout should operate. Some in congress and many Americans have questioned whether a bail out is really necessary. The issue, as it stands, is that no one really knows what the consequences will be if the government let's this scenario play itself out. Banks will, unquestionably, continue to fail, as we recently saw with Washington Mutual. This could freeze the financial system, and banks across the nation may lose access to capital they desperately need. There could be a run on the banks, there could be the next great depression. No one really knows, that's why there's been such a sense of urgency. Others, like Senator Ron Paul, have said that we're really only delaying the inevitable by funding a government bail out. Illiquid assets purchased by the government will be made with money it currently doesn't have. This could create a downward pressure on the dollar and an eventual collapse of the currency. The depression following that event could be much longer and more severe than the short term pain currently being felt in the markets. Definite answers are few and far between, and for now most consumers will just have to see how it plays out. Category: Personal Finance 9/26/2008
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