Survey: Investors and Noninvestors React Differently to Bailout

It would appear that investors have a rosier picture of the economy than is warranted. Their misplaced faith in a broken system indicates how out of touch with reality they really are. It's not 'inside information' or a more intimate familiarity with the ins and outs of the economic engines of the world that gives them this perspective. It's, for lack of a better word, greed. They don't want the gravy train to stop. They're not happy it's slowing down. But then, given how the investment bankers bungled in their fiduciary duties and misled everyone about the risks, having an utter inability to see things as they really are is only par for the course.

The economy has been chugging along oblivious to the fact the tracks (the lending practices of the investment bankers) were undermined and rotted due to gross fiscal mismanagement. Toss in a group sense of invulnerability to any consequences of that mismanagement. Add a sprinkle or two of incompetence. It's no wonder investors think things that aren't real. Not one of them had the wisdom or foresight to anticipate this mess and take steps to shield themselves from it.

They were too busy getting rich taking advantage of it.

In the meantime, businesses are failing, houses are being repossessed, mortgages are still being defaulted on, and the people are learning that the investment banks idea of self-regulation was the metaphoric equivalent of opening the American people's hen house and hoarding eggs in one corner ignoring the foxes were killing chickens in the nests. It's no wonder they're confused why there are no more eggs.

Oh, and as for a 'bailout', 'rescue plan' or whatever you want to call it, it's a VERY BAD IDEA. Yes, it will have a positive short term effect. But the further damage the to the dollar, devaluing it more, will result in a greater rate of inflation, which itself can lead to economic collapse. Throw in the fact this bailout is only a short-term solution (My crystal ball says three months, maybe four, and the whole house of cards will crash again), requiring further infusions of taxpayer money, further devaluing the dollar will lead to a much more painful recovery than if we just let them crash, let the other banks pick over the carcass, have the government regulate the lending market as much as needed to keep credit from seizing up and ride it out with a dollar value that isn't going to keep plummeting even more than it already does year after year due to big government hand-outs to corporations who should have known better.

Riding out the consequences of massive lending bank failures is going to hurt, but it will be a relatively quick pain, with recovery measured in months, rather than decades, which is virtually guaranteed under the 'bailout'.

The US government already has more debt than we can pay off.

Frankly, I'd rather see a year or two of hardship (at most) than decades of lingering, painful government capitalization of private investors.

Fatesrider of CA 10:51AM October 03, 2008