This loot is supposed to serve as an economic stimulus to jump started the already stagnant economy (which I wrote about a few weeks ago) with roughly 66% allocated for tax breaks for individuals ($880 for individuals and $1600 for families) and a significant proportion of the remanding one-third to businesses given it also includes some additional but narrow support for unemployment benefits and food stamps for the poor.
I just wonder why they could not see all this shit approaching? A perspicacious person would have seen the possibility of such. Ronald Reagan started all this mess some 30 years ago. The California cowboy Actor as President Jones put in place policies that reduced the Feds typical role of providing government safe guards for the general public. Namely, protective acts that dealt wit such public concerns like water and food quality/safety and the safety of pharmaceutical drugs.
But it wasn’t all on him. Let us not overlook former (getting some head) President Bill Clinton made what Regan did even worse. It was Clinton who repealed the Glass-Steagall Act (which historically kept banking and Investment houses separate). By this act alone, he made the financial industry like Wal-Mart – one stop shopping. The act was put into lace after the Crash of 1929 (Black Tuesday) and the great depression since both were mostly caused by "improper banking activity or what was considered overzealous commercial bank involvement in stock market investment."
Under his watch, Congress passed the Private Security Litigation Reform Act (H.R. 1058). This is why it is difficult to prosecute, prove and to convict K-Street supporting crooks of security Fraud anymore. It also led to a new dawn in American business by creating an environment ripe for the Tyco’s, Enron’s, and Ken Lay’s to doctor books, profits and stuff their pockets while companies folded, went bankrupt and millions of investors taking all of the losses. I could continue and link this with the present environment of sub prime mortgage lending but such is self-explanatory.
I do not know what they are trying to do. To me what is being proposed and implemented inclusive of the Federal Reserve Bank dropping the over night lending rate to 3.5% don’t do anything. Sure in the short term, it’s like holding pressure on an open ax wound. But like an ax wound, the bleeding may stop, but the person still requires major surgery and may even still get gangrene.
For the general public, the 3.5% cut means that the prime rate will drop to an equal amount to 6.5%. So one may see this if they have credit cards since most folks have variable interest rate credit cards.
So again, this is nothing new. We have set ourselves up for this with Lame leadership including the Bush’s, Bill Clinton and Reagan. I mean am I stupid? Why would going into debt an additional $150 billion help the economy while we are approaching spending 500 billion on Iraq alone? Then we really don’t know the true impact of the sub prime mortgage hustle because there is no way to determine what banks portfolio’s are really worth, or how much lot they have really lost – at least the way I figure. Add to that this past week, interest rates of short-term treasury bonds (6-month) dropped to their lowest rate since 2004 and companies like Delta and United (although the are airlines) reported last quarter losses of 50 and 53 million dollars accordingly. So please tell me if I am wrong, before I transfer 12-15% of my portfolio into gold ingots.