Bailout Bonanza Continues to Prevent Trickle Down of Bad Debt

The Federal Government reversed itself after 2 days of record declines in the financial markets; it is pretty clear that there is no faith in the financial markets without the government guarantee. The mantra of “too big to fail” has completely taken over though I do not understand the criteria used to choose who wins and who loses. Why let Lehman fail but not AIG? As I write the Fed and the Congress are feverishly meeting to create a new government entity to buy up the rest of the bad debt out there. If this is the case, Lehman got a bum wrap.

However, it was good news for the market and it leaped over 400 points. I am not convinced this is the best solution no matter how much we fear financial failure because I am not convinced that it is a good idea for the government to keep borrowing funds for all of these bailouts. If the government had the money that would be fine but it doesn’t. The taxpayer is on the hook for the largest transfer of debt in American history.

Before George Bush was elected President, the discussion centered on his ability to ruin just about everything he touched. 9-11 saved him from himself for a while and delayed the inevitable. There was a point when he enjoyed incredible popularity much to my dismay, I might add. We were “winning” the war on terror and Americans improved their standard of living; trading up to bigger houses and better things because George Bush was right prosperity did trickle down. Unfortunately, we did not realize the sleight of hand; victory and prosperity were an illusion. And while the war rages on and the rest of us take on 2^nd jobs and plunder our 401k’s to remain afloat, the government has chosen to bail out some of the richest companies in the world supposedly to prevent all of that bad debt from trickling down.