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The Bailout Essay

1199 words - 5 pages

The federal bailout of big banking and the automotive industry has set off a cascade of requests to the federal government for funds. The United States school systems are facing over $350 billion budget shortfalls, prompting states to ask for their money from Uncle Sam. The pornography industry has even asked for money, a projected $5 billion. Where is the line drawn? Whose was at fault anyway? Was it the American consumer and his need for all things material? Was it the housing bubble that did not seem to have a bursting point? The total tax dollars spent have already amounted to an astounding $9.7 trillion, enough experts say, to pay off 90% of home mortgages.Before the bailout businesses went into debt to the near downfall of the U.S. financial institutions. Only responsible and ethical management of these facilities will heal the rift created by the tumultuous underpinnings of the fiscal and ethical ineptitude displayed by the managers of the financial system.Debt is the persistent problems of the recipient nations. Trade Promotion Authority must be granted to the President if America wishes to accomplish its foreign policy goals quickly and effectively. Independent foreign investment must be encouraged, but not subsidized, by the U.S. government, for foreign investment greatly benefits both the American market and foreign markets as well. America must grant universal debt amnesty and negotiate similar amnesty from the International Monetary Fund and the World Bank, if horribly indebted nations are to be freed from their economic burdens and allowed to contribute to the world market. Current foreign aid programs must be discontinued; their cost too drastically outweighs their very meager results.America is wondering if the economic crisis will eventually bring a recession to a depression, the answer is no. Oil has been discovered under the Great Plains states and farming and irrigation has improved a hundred fold since the 1930s. In short, food and oil will keep us out of a Depression. I firmly believe that due to the mechanisms put in place by Franklin Delano Roosevelt in his revolutionary terms in office will never let America go into a Depression, such as the one that occurred in the 1930's.The 2007-2008 Financial crises, similar to the Great Depression and Japan's lost decade, started with the bursting of an asset bubble. An important difference, however, has been the introduction of many complex financial instruments since the late 1990's. The result was that many financial firms did not understand the risks of the positions held on their books. As the value of these assets dropped in value, many financial firms were in danger of collapsing. The U.S. government, in trying to avoid systemic failure of the financial system, hastily designed plans to bail out the industry. In so doing, the government has committed trillions of dollars. Another outcome of the financial crisis is the slowdown of the economy. This has caused price levels to...

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