For those who think the $700B is a bad idea...
(excerpts from
The Bailout: Myths, Half-Truths, and Inconsistencies )
Myth: The proposed bailout will cost taxpayers at least $700 billion
Fact: The proposed $700 billion isn't a donation, a grant, or a gift -- it's an investment. The money will be used to purchase assets from banks at a steep discount to nominal value, and then sold down the road once the smoke clears. The proceeds from those sales will go back to the Treasury and pay off the debt issued for the bailout. It's completely reasonable to assume taxpayers could in fact profit
"In any case in which there is a shortfall, the President shall submit a legislative proposal that recoups from the financial industry an amount equal to the shortfall ..." Warren Buffett weighed in on this topic, saying, "If the government makes anything over its cost of borrowing, this deal will come out with a profit. And I would bet it will come out with a profit, actually."
Half-truth: This is a bailout of Wall Street
Fact: This is not a bailout of Wall Street: It's a bailout of the American financial system from a problem caused by Wall Street (as well as Main Street).
The portion that does get bailed out is the financial system that every single American relies on whether they know it or not. From grocery stores that rely on lines of credit to stock their shelves to small businesses that rely on credit to make payroll every month, there truly isn't an inch of the economy that wouldn't get sucked down the tubes in one way or another if the financial system were allowed to collapse.
Inconsistency: The economy won't implode if a big bank goes under
Fact: The only thing that stopped the domino-style financial meltdown was word that the mother of all bailouts was taking shape.
Inconsistency: Let 'em fail, the sooner they die, the sooner we recover
Hogwash. "Tough medicine" makes sense insofar as the medicine isn't so tough that it kills you. The big factor that needs to be addressed here is that foreigners own more than one-quarter of all the public debt in America, which in effect gives them the ability to send the financial system into Armageddon if they sense our financial fortitude teeters on collapse.
Any large-scale fallout in the financial sector could give foreigners a good reason to start dumping treasuries
en masse, causing a bank run on the largest debtor in the world: the U.S. government. There is no doubt that such a run would push the value of the dollar to unimaginable lows, as well as cause a domestic credit crisis to boil into a currency meltdown. Such a meltdown would make any recovery several orders of magnitude more difficult than it would be with the bailout.
I'd be interested to hear anyones opinion who disagrees with the bail out as I can only imagine that you hold that view because you don't think the situation we are faced with is as dire as it is. Just because markets have recovered from down turns in the past doesn't mean they always will.