Our government announced this week that the taxpayers would offer financial institutions a $700 billion package to buy their troubled loans. I object strongly. Our Republican colleagues speak about self sufficiency yet our debt has grown to unwieldy levels. $400 billion a year is sucked out of our pocket books to pay the interest alone. The debt ceiling has to be raised about $10 trillion to offer this package to financial institutions.
Let's face it, we all benefited from the booming economy of the last several years. The fed funds hovered around 1 percent, credit was flowing to those who could not afford to pay for it. What do we expect, our government has acted in the same way. We have relied on foreign countries to buy our debt. If no country bought the debt, credit would not have been so fluid. The countries will demand better rates in the future because the U.S. is no longer viewed as the safest investment. Our debt payments will increase and credit will tighten some. We are losing our economic sovereignty.
Who will pay for it? We will, our children will, and their children will. The debt is simply too high to expect it will be retired in our generation. So the companies and their executives benefitted from the free flowing credit, with high profits, big bonuses, and exercised stock options. I am sure that my bonuses were bigger because of the strength of my bank's performance. But now we must deal with the fall out, tighten our belts, and deal responsibly with the problem.
I do understand why dramatic answers seem to be necessary. If banks can't loan between themselves because credit markets are freezing, many will fail, consumer confidence will be shaken. The economy will further falter. Yet, we are resilient - our we perhaps on course correction that changes our relationship with money and what we consume. Maybe that is not so bad?
