Friday, September 19, 2008

Bad Bailout, Bad.

That article, and that story at Bloomberg. Bailout Bad.

It's like giving money to gamblers.

I have a really bad feeling about that. Now we start to see the extent to which the not-so-All-Powerful US government can go. It's not going to be enough.

The day the US government balks at the buying of the bad debt, (say when it reaches 1 trillion) the economy will still tank.

The fact of the matter is that the US needs inflation now to drive salaries up so that people can actually pay their 30-year fixed mortgages. There's nothing that can be done with ARM. They are going to default wholesale. There's no reason for people to try to work out a deal on their ARM now... Just wait a few months and sell it to the Govt.

I think Wall Street is going to realize this soonest. And then: roller-coaster again.

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