Monday, September 29, 2008

Can't Say They've Not Got Guts ..

As I understood it from the Guardian and points left, the evil Republicans were going to rob Joe Six-Pack in order that the Wall Street pirates could continue to clock up billions in bonuses - all taxpayer-funded.

"Hah ! They've been talking about standing on your own feet and 'let the market decide' for years ! Now THEIR industry's gone pearshaped they're screaming for Mummy State to kiss it better !"

Instead, it's the Democrats that want to rescue the fat cats while the Republicans, in what IMHO is a courageous and principled stand, find the thought of billion-dollar tax-funded bailouts just too much to stomach.

I said I thought it courageous and principled. Whether it's actually going to do more damage to poor Mr Six-Pack than fleecing him would do, I'm not qualified to say. Sound money and no bail-outs didn't exactly keep Joe in beer last time out.

In the 1920s, American consumers and businesses relied on cheap credit, the former to purchase consumer goods such as automobiles and furniture, and the latter for capital investment to increase production. This fueled strong short-term growth but created consumer and commercial debt. People and businesses who were deeply in debt when price deflation occurred or demand for their product decreased often risked default. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged.

Massive layoffs occurred, resulting in US unemployment rates of over 25% by 1933. Banks which had financed this debt began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits en mass, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets.[citation needed] Outstanding debts became heavier, because prices and incomes fell by 20–50% but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 US banks failed. (In all, 9,000 banks failed during the 1930s). By 1933, depositors had lost $140 billion in deposits.

Bank failures snowballed as desperate bankers called in loans which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending.

Hmmm. Food for thought there ... nonetheless, isn't American democracy wonderful ? Over here, Government initiatives are overturned by the courts. Over there, they're overturned by the votes of democratically elected representatives. We used to have something like that - it was called a Parliament.


Anonymous said...

Not wishy washy!

Good comment

Anonymous said...

A good few Democrats, 80 odd I think, also refused to back the bail out bill.


Anonymous said...

Yeah but they only did that to try to put the blame for the bailout on the Republicans and so they could later claim that a large number of dems didn't support it.
They treat it as a game.
"Look at the Republicans bailing out their rich friends" would have been the line.

Its same in Britain, the Tories voted in favour of an EU referendum but they knew the government would get it through without them, how they would have voted in a close vote I would like to know!