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Has the Bailout Made a Difference?

Testifying before Congress Nov. 18, Treasury Secretary Paulson and Fed Chairman Bernanke each asserted that financial conditions are better than they would have been without the U.S. bank bailout.

Do you see any evidence that is true? Do the Treasury's capital purchases and other steps announced under the Emergency Economic Stabilization Stabilization Act of 2008 seem to be easing any of the stresses affecting your markets, your firm, or your clients and trading partners?

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AUTHOReFinancialCareers News Insider Comment
  • Sq
    Squid
    2 December 2008

    Remember what happened to the market when Lehman didn't get a bailout? There was a run on the money market fund that held Lehman papers. The NAV broke the buck. Investors flocked to pull their money out which caused a dramatic concern across all other money markets. Normally, that should not have been the case, but we are shown that anything is possible.

    The bailout is unfair. Yet, our current economic system has webbed itself across various industries and economies and thus a domino effect will impact even the smallest enterprises. That means there could've been more job losses in Oct or Nov on top of the figures announced in the weekly job reports.

    We may not see the bailout benefiting consumers physically or monetarily. It has, however, cushioned the markets a bit and postponed an even deeper economic crisis for the time being. And I mean "postponed".

  • am
    aminou
    1 December 2008

    This bailout is fundamentally biaised and wrong. The real estate bubble created by Greenspan and the Bush administration thanks to the Fed's disastrous monetary policy (1% rates for too long) in 2003-2004 is what we are seeing now. The truth is that the US economy never had the time to recover fully from the dot com bubble and instead of encouraging people to build up savings, the country kept borrowing trillions and trillions of dollars from Chinese and Japanese to blow it on....consumption!!!

    Basic economic principles tell that you print too much paper and increase the money supply in the system while maintaining LOW interest rates then you are fueling hyper-inflation!!!

    My word is that it is not the FED's role to take care of brokers and institutions whose bets went wrong during the subprime and real estate frenzy. It should rather direct those funds into more meaningful projects, i.e infrastructure, healthcare and long term projects to help the US build a productive economy. It is sad to know that the loser in all this scheme is always the average american joe. It is a "privatise gains during boom times and socialize losses during tough times" type of bailout!!!

  • gg
    ggosta
    24 November 2008

    i don't see a pickup in the economy yet.. I think it's gonna take time for everything to settle with or without a bailout!
    Plus im not really clear which institutions received help from this plan?

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