It is necessary to pass the bailout plan in order to help and stimulate the economy. Not only will it have an impact on the American economy but on global markets as well. Instead of focusing on bailing out failed companies, the plan should center more on homeowners and help them to pay off their debts. By doing this, the bill would help homeowners as well as companies who are in possession of these kinds of troubled assets. Politicians should be less focused on their reelection and more focused on voting for what will be best for their country and the global community.
The government has to pass the bailout plan in order to free up banks and restore some liquidity back to the markets by taking on bad loans. The whole global financial system depends on banks lending from each other. Cash flow can be seen as the grease that keeps the financial system running. It can be compared to a car’s engine. Without any oil and gas the engine will stop running and the car won’t go anywhere. Right now, banks are unwilling to extend credits to other banks which results in the borrowing of money to get more expensive. If the bailout plan is not passed, more banks could fail and the stock market could plummet and erase retirement accounts. In addition, businesses could find it very difficult to get credit. They would be forced to close which will wipe out millions of jobs.
According to the bailout plan, the Treasury Department gets $250 billion dollars to immediately start buying up troubled assets, such as mortgages from banks and financial institutions. If needed, the president could spend an additional $100 billion on the purchase of troubled assets. By buying these assets, the government will be given ownership stakes in companies. Once ...
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Hitt, Greg and Paletta, Damian (2008). Leaders Wrangle Over Bailout. The Wall Street Journal[On-line]. Available at: http://online.wsj.com/article/SB122235295272975207.html?mod=article-outset-box
Mayerowitz, Scott (2008). Does the Bailout Ignore Homeowners, Execs? ABC NEWS[On-line]. Available at: http://abcnews.go.com/Business/SmartHome/story?id=5909063&page=1
Luhby, Tami (2008). Bailout: Little help for homeowners. CNN Money[On-line]. Available at: http://money.cnn.com/2008/09/28/news/economy/bailout_foreclosure/index.htm
World reacts to US bail-out rejection. BBC[On-line]. Available at: http://news.bbc.co.uk/1/hi/world/7643903.stm
Hulse, Carl and Herszenhorn, David M. (2008). U.S. House rejects plan for bailout. International Herald Tribune[On-line]. Available at:http://www.iht.com/bin/printfriendly.php?id016566700
Vlasic, Bill. "U.S. Ends Bailout of G.M., Selling Last Shares of Stock." The New York Times [New York City] 9 Dec. 2013: n. pag. Print.
Teslik, Lee. "Backgrounder: The U.S. Economic Stimulus Plan." The New York Times, January 27, 2009.
... strength of imaginary wealth, the government bubble (mortgages and bonds) is propping us up now. The pressure within the bubble will grow so great that the Fed will soon only have two options – 1. Finally contract the money supply and let interest rates spike -- which will cause immensely more pain than if we let this happen in 2002 or 2008, or 2. Keep pumping more dollars into the economy, causing hyperinflation and all the evils that come with it. The politically easier choice will be the latter, wiping out the dollar through hyperinflation. The grown up choice would be the former, electing for some painful tightening, which will also entail the federal government admitting that it cannot fulfill all the promises it has made, and it cannot repay everything that it owes. Regardless, well get the big crash. The longer we wait, the bigger the explosion will be.
Norris, Floyd. "Bausch & Lomb and S.E.C. Settle Dispute on '93 Profits." The New York Times. The New York Times, 18 Nov. 1997. Web. 16 May 2014.
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The American Recovery and Reinvestment Act was signed into law by President Obama on February 21, 2009. The law had three major goals which were all aimed at stimulating a sluggish US economy. The first goal was to create new jobs and save existing ones by tax credits for hiring new employees. The second goal was to spur economic activity and investment in long term growth by increasing the amount of business asset that could be acquired by companies while allowing for immediate deductions for the cost of the assets as well as numerous tax credits for individuals and businesses. The third goal was to foster unprecedented levels of accountability and transparency in government spending by requiring recipients of recovery act funds to post acknowledgements on the Recovery.gov website.
In 1997 the Clinton Administration signed into law the Balanced Budget Act. One of the key provisions of this act was reduction in Medicare payments to health care providers. The reductions threw a health care system that was essentially in equilibrium into turmoil.
...cording to Mishkin’s Paper “The Financial Crisis and the Federal Reserve”, the bail-out amount is 700 billion.)
Krugman, Paul. "Bernanke and the Bubble." NY Times 28 Oct. 2005. Friday Sec. A: 21.
...avoiding even deeper collapse of the global GDP and of employment. The government also created the Troubled Asset Relief Program (TARP), for the establishment and administration of the treasury fund, in an effort to control the ongoing crisis.
The United States faced the worst economic downfall in history during the Great Depression. A domino effect devastated every aspect of the economy, unemployment rate was at an all time high, banks were declaring bankruptcy and the frustration of the general public led to the highest suicide rates America has ever encountered. In the 1930’s Franklin D Roosevelt introduced the New Deal reforms, which aimed to “reconcile democracy, individual liberty and economic planning” (Liberty 863). The New Deal reforms were effective in the short term but faced criticism as it transformed the role of government and shaped the lives of American citizens.
Lindauer, J. (2011, November 24). Picking Winners When Greece Defaults. Seeking Alpha. Retrieved February 1, 2014 from http://seekingalpha.com/article/310107-picking-winners-when-greece-defaults
...ent bailout. The state became the prime agent of redistributive policies. They sought redistribution through the revision in the tax code to benefit returns on investment rather than incomes and wages. A lot of workers were laid off and the Obama administration’s financial reform has not been able to solve the problem. All those top executives who caused the crisis happened to be economic advisors to Obama. This financial crisis has caused a lot of problems and inequalities in our society. We live in a corruption world whereby those who make the system benefit the most. I do not see any change in the coming year if we still remain in this neo-liberalism system where there is conflict between capitalism and democracy, the ruling class and the working class. We can only change this corrupt system if we all come together and force change in Washington and Wall Street.