I Admit It: I am torn over the bailout

[Ban my account ffs!]

Liquidity is basically your ability as a business or individual to convert your assets into cash.  Right now these banks are suffering because their assets are tied up in bad loans... so they're stuck because they don't have the money lend to people, not to mention they're skeptical about doing it anyway.

If the government buys out the mortgages, then these companies will have cash that they can loan out to people.

This is where I'm against it... we shouldn't be rewarding these companies.  The government should really provide some subsidization and loans to the companies that aren't bogged down and buy the "toxic assets" from the failing banks at bargain basement prices.

Banks like U.S. Bancorp and Wells Fargo are in a good position to lend money to consumers, and some financial help from the government would help them greatly... this is also the case for small regional and community banks.

I think if anything, the government should only "bail" out these companies to the point where they are basically starting over.  They should take huge losses on this because the taxpayers shouldn't have to reward their mistakes.

But if the government can give them just enough to survive while taking the bad assets away, they can hopefully heal their wounds and move on while the more responsible banks hold the economy up.

[Ban my account ffs!]

I'm not opposed on free market grounds. I'm more concerned that this will just cause massive inflation due to the massive debt it would incur (1 trillion deficit?) and further destabilization overall. If I was sure it could save the economy I'd endorse it without hesitation. I'm not an idealogue or idealist about these things.

This is why it would be a good idea to have a temporary 10% tax on income over $1,000,000.  This will at least stymie some of the inflation.  Save the rich by taking money from the rich.

[Ban my account ffs!]

I think there needs to be effective regulation that ensures that these companies are looking closely at who they are lending money to and how much they are giving.

We as Americans must also learn to live within our means.  I think that is imperative regardless of what side you sit on.  I just believe in using government as an effective tool to increase those means... but you should never live beyond them.

We can't make the mistakes taht were made in the Great Depression.  We can't stand back and do nothing and we can't choke the market with regulations.

We need to boost spending on infrastructure and make investments in the economy to get the gears turning again.  Putting people to work rebuilding our highways and railroads will give people more confidence and they will start spending again.  No tool is as effective as positive thinking and hope in these times.

We need to let the economy correct itself without letting Americans fall through the cracks.  By investing in things like our infrastructure and schools, we are putting people to work building a strong, long term foundation for our economy.  This will have a more positive effect than direct government intervention that seeks to set wages or prices.  That will simply scare people out of investing which is important at this time.

That said, we do need a modest tax increase on the wealthy to help towards balancing our budget.  I don't advocate a rise to 70% or 90%... but again, I believe a 10% tax on income over $1000,000 to help pay for this bail out is important.  Sure, it will discourage a small amount of investment... but no more than just letting our debt run up more and more to the point where long term investments in our country seem futile under crushing debt.

So... thank you for reading my completely random and disconnected thoughts on the issue.