Market Commentary

The financial bailout by the U.S. government is a bad deal from the outside looking in. The plan is supposed to be designed to help unclog the holes in the financial system and minimize the cost to tax payers. The U.S. Treasury Secretary Henry Paulson is backing the plan 100% but says, “he hates the plan” because there are no guarantees that it would make things better. If I was the person that put this plan together and felt that it would not work I would not do it. He is backing the plan along with George Bush and trying to push it through as fast as possible no matter what the consequences maybe in the long run. This reminds me of when the U.S. went to war with Iraq quick, fast and in a hurry by using scare tactics.

In of March of this year Henry Paulson appeared on Fox News after the fall of Bear Sterns. He was asked if more Wall Street firms are in danger. He stated that “he has great confidence in the U.S. financial markets because they are resilient, and flexible our financial system, institutions and banks are strong”, now he’s suddenly thinking different. John McCain stated that “the reason for the financial crisis is due to greed and corruption on Wall Street”. He probably forgot to mention that since the Bush administration has been in power over the past 8 years oil ran from $12 per barrel to a high of $147 per barrel in June of this year. Before they attempt to point fingers and blame anyone I think they should simply take a look in the mirror.

As far as I’m concerned all of Washington seems to be confused. If they knew how to resolve these issues they would have fixed the problem a long time ago unless they themselves have other plans. George Bush in a press conference last week stated that “the U.S. economy is facing unprecedented challenges and he is responding with unprecedented action”. How can you call pumping 700 billion dollars into the economy action when the tax payers will have to pay it all back with no guarantees that the problem will be fixed. A few years ago he wanted to fix the social security problem by putting tax payers hard earned benefits into the stock market by now they would have probably been broke. The American tax payers needs more options in order to find the best route to take care of the current economic problems. I would all like to see a long term fix not a short term patch.

This entire plan does not make any sense to me at all. The objective is for the government to give the banks more money and let them keep all the bad loans on their books in order to normalize our financial system. Japan tried a similar plan in the early 90s and their economy remained stagnant for an entire decade. Buying bad loans is a bad idea and not the way to fix the problem. The U.S. government is basically adding more fuel to the fire. The U.S. budget deficit declined from $318 billion in 2005 to $162 billion in 2007 but is estimated to increase to $410 billion by the end of 2008. If we were to add that $410 billion to the $700 billion that the government is planning to pump into the financial markets the 2009 budget deficit will be at over 1 trillion dollars. America is now looking like a cheap hooker standing on a corner holding a for sale sign. Budweiser is Bulgarian owned and operated by Imbev, the next step is for China and the Middle East oil tycoons to come in and buy maybe Disney or General Electric, maybe even General Motors or Ford. This is all a big mistake being put together by the Bush administration and there needs to be other alternatives in place so that this problem can be rectified accordingly. Innovative business leaders like Bill Gates, Warren Buffet, Steve Jobs, Rupert Murdoch, Wilbur Ross, or even Larry Ellison can step up to the plate and invest in any of these distressed banks in order to get them up and running again so that we can avaoid this indecent proposal put forth by Henry Paulson and Ben Bernanke.


By: Marlin Rolle