Shelby: Bailout Just Codifies Ad Hoc Approach

Wrong perception

I hate to say it, but the entire general public is perceiving this situation absolutely wrong. First, and foremost, this 700 billion dollars is not a bailout, it is a risky investment. The "ASSETS" which the government will be purchasing will still continue to be ASSETS and at a later date be sold back into the market. There is no better customer of these assets than the government. They have all the tools necessary to take a long term approach to re-stabilizing the US economy and then in turn delivering and selling these assets back into the market. The government in this case will most likely make somewhere in the rage of -30% to plus 350% on this investment. The current value off these assets are somewhere in the range of 30 cents on the dollar.

Please take that in for a second. The government is purchasing an asset portfolio that was once worth aproximately 2.3 Trillion dollars, 2300 Billion dollars at a flea market price of 700 Billion. Now, for a normal investor buying something like this is a huge risk because they cannot control the direction of the economy and have to hope that their government will. But, if the government is the investor, they have a vested interest to bring the economy "actually" back to it's feet. When I say actually, I specifically mean the numbers in the general publics bank accounts, the homeowners and families. Following this "investment" the government is now financially viable internally for the success of the most general American families. I think this is going to lead to extreme levels of accountability within the government, as the government themselves has financial mirrored themselves to the state of general american families. Therefore, the 3-5 year outlook for the general and wide spread mainstream demographic of American Families will become the sole interest of the government. I know I have re-iterated that a few times, but understanding that connection is vital to understanding why this investment is great for Americans from a long-term perspective.

Let's look at an example. Say the government is faced with a similar situation as the Iraq war decision. Considering the situation, the government now has to make the absolute best decision for the general public and not thier own political aggenda. If entering a war is going to hurt the general American family then it will hit the Government, leading the government to only enter into a war that is absolutely necessary. This investment or bailout will hold the government far more accountable for their decisions and the effects of their decisions.

Also, this is not a bailout of wallstreet. Yes CEO's gained tons of money while managing these companies but they didn't do it illegally, and anyone of us could have done it if we baught stock options in these companies. Ultimately I do agree with having future restrictions on CEO's short terms bonus packages, but rather it is the regulations agencies that allowed the leverage.

Matt @ Sep 26, 2008 14:46:34 PM