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Paul Krugman writes that a federal bailout of the financial sector seems inevitable.

The last bailout of the S&L industry cost $450B in 2008 dollars. A book review in The Economist of an analysis of the current situation pegs the value of at-risk assets over $1 trillion. In the 1980's, when Japan's property market became ridiculously overvalued, the ensuing correction lasted about 10 years, resulting in zero economic growth despite near-negative real interest rates.

I'm a bit worried about all this.

I guess this is a bad time to read Ayn Rand's Atlas Shrugged?

So let's see.

Deficits as far as the eye can see, a cascading federal debt, and an entitlement tsunami.

A $4 trillion war.

A $1 trillion financial sector bailout.

A falling dollar, rising prices, and foreign investors getting tired of buying our debt because of low interest rates.

This doesn't look pretty.

sighyoung wrote:So let's see.

Deficits as far as the eye can see, a cascading federal debt, and an entitlement tsunami.

A $4 trillion war.

A $1 trillion financial sector bailout.

A falling dollar, rising prices, and foreign investors getting tired of buying our debt because of low interest rates.

This doesn't look pretty.

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sighyoung wrote:So let's see.

Deficits as far as the eye can see, a cascading federal debt, and an entitlement tsunami.

A $4 trillion war.

A $1 trillion financial sector bailout.

A falling dollar, rising prices, and foreign investors getting tired of buying our debt because of low interest rates.

This doesn't look pretty.

No it doesn't.

However Bush addressed the nation a few weeks ago and assured everyone that recession is not on the horizon. So we have that going for us.

EDIT: We also forgot to note oil topping $100 a bbl, and the US automotive industry completely lodged in the toilet. Good stuff there too.

Popeye_Card wrote:

sighyoung wrote:So let's see.

Deficits as far as the eye can see, a cascading federal debt, and an entitlement tsunami.

A $4 trillion war.

A $1 trillion financial sector bailout.

A falling dollar, rising prices, and foreign investors getting tired of buying our debt because of low interest rates.

This doesn't look pretty.

No it doesn't.

However Bush addressed the nation a few weeks ago and assured everyone that recession is not on the horizon. So we have that going for us.

EDIT: We also forgot to note oil topping $100 a bbl, and the US automotive industry completely lodged in the toilet. Good stuff there too.

I know GW doesn't bear the sole responsibility for our economic situation... but I can't help but feeling that America is turning into the Texas Rangers circa Bush ownership.

The more I think about the past 8 years in the Oval Office, the more rage I feel. Bush has f***ed this country like no other President.

Hungary Jack wrote:The more I think about the past 8 years in the Oval Office, the more rage I feel. Bush has f***ed this country like no other President.

Staunch conservatives will claim that it was the policies of the Clinton era which led to the current situation.

I think it's a bit of a combination of both. I think Bush's overall policies (defense spending, etc.) while not nipping the other problems in the bud early led to this current mess.

Not that consumers don't share some of the blame as well. A large portion of the economy bought into this housing boom and bust.

All that said, I'm still not a believer in trickle-down economics.

I also think Greenspan's reputation as Fed Chair will drop a few notches as well... if it hasn't already.

I don't doubt that the Fed kept rates too low for too long. But in Greenie's defense, they were in uncharted territory post 9-11. We will work through the speculative bubble that resulted, but Bush took many actions that endangered the long-term fiscal health of the US:

1) Committing to a huge costly war/occupation in Iraq when Bin Laden was caving in northern Afghanistan / Pakistan. We literally invaded the wrong country.
2) Yielding to Boomer pressure for prescription drugs benefits, adding huge costs to a program that is heading toward insolvency
3) A corporate pork-laden, short-sighted energy bill
4) A ridiculous farm bill
5) Fiddling with inconsequential religious issues while Rome was burning, eg Terry Schiavo

My blood pressure is starting to rise...