We're Doomed!

Once Barack Obama signed his Economic Recovery plan into law, the markets began sending him a sign that his plan was going to fail massively. According to the International Herald Tribune, the Dow almost hit one of the lowest levels within a decade yesterday by closing at 7,552.60 points, which was almost 300 points down. This economic downturn has spawned around the world, not just here in the United States. There are other pressing issues as well, where we need to look.

Another negative effect from the Stimulus that we need to be aware of has been occurring prior to the bill being signed into law. The fact that banks and financial institutions have been receiving aid from the government. It might not sound like a surprise, but some of these banks are household names, like Bank of America, Wells Fargo, Citibank, etc. These institutions should have a survival instinct of sorts and should not be bailed out by the Federal government, as these banks made the unwise decision to lend to those who could not afford to take the loans. [Source]

The negative impact of the financial institution bailout is now calling for some in Congress to call for nationalizing the banks. This would no doubt create even more of an economic downturn. With the Federal government nationalizing the financial institutions would open the door to more scrutiny and regulations on lending practices, thus effectively harming the free market economy. The fact that some Republicans (er…RINOs) are calling for this to occur, and the effect is not healthy for our system. Look at what this did in Japan, effectively destroying their economy.

According to the Financial Times, leaders like Lindsay Graham (RINO-SC) and John McCain (RINO-AZ) have been calling for this after learning that Bank of America and others have been receiving some of their share of the bailout.

Mr Graham says that people across the US accept his argument that it is untenable to keep throwing good money after bad into institutions such as Citigroup and Bank of America, which now have a lower net value than the amount of public funds they have received.

“You should not get caught up on a word [nationalisation],” he told the Financial Times in an interview. “I would argue that we cannot be ideologically a little bit pregnant. It doesn’t matter what you call it, but we can’t keep on funding these zombie banks [without gaining public control]. That’s what the Japanese did.”

Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has moved more towards what he calls the “Swedish model” – an approach backed strongly by Mr Graham. In the early 1990s Sweden nationalised its banking sector then auctioned banks having cleaned up balance sheets. “In limited circumstances the Swedish model makes sense for the US,” says Mr Graham.

Mr Obama last weekend made clear he was leaning more towards the Swedish model than to the piecemeal approach taken in Japan, which many would argue is the direction US public policy appears to be heading.

“They [the Japanese] sort of papered things over,” Mr Obama said. “They never really bit the bullet?.?.?.?and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time.”

Right now, the free market economy is about to be murdered by the Keynesian nut jobs serving us in the Federal government. If these nationalized measures (sounds like someone has been hitting the Alexander Hamilton poison…more on this later) are enacted, the economy will collapse even further. I hate to be the naysayer, but we are effectively doomed!