There are myriad reasons why America is in this mess but I believe the onset of the current crisis stems from banking deregulation of the 1980s which, over time, caused property prices to soar, banks began to lend recklessly and private debt shot up.If the government has to bail out Wall Street, inflation will increase tremendously, the dollar will weaken and we'll be in the biggest recession since the stock crash of 1929! These same economic problems we are suffering now happened in Sweden in early 90’s for the exact same reasons and their government was able to solve the problem and turn a profit. Maybe we should call them. Their plan extended blanket loan guarantees to all banks with no collateral required. A special agency was set up to review the books of all the banking institutions involved and assign a realistic value to real estate and other assets. The Swedish government then nationalized some banks, merged others, and shut down the weakest. While Sweden did suffer a recession that lasted 3 years, they now enjoy a much ore stabilized economy. I’m sure we could use part of this plan to some extent instead of having the average taxpayer fork over money we don’t have.
It resembles Escalation of Commitment - "throwing good money after bad." But the only ones who are going to suffer are us - the middle class and the lower class (what's left of us anyway). The CEOs of the corporations who got us into this mess in the first place should be forced to give up their pay raises, their stock options, their bonuses and their golden parachutes and whatever other liquid assets. Really. Paulson did when he became Treasury Secretary. He went from making $40 million a year to $191,000 a year. Of course, he can afford the basics which the middle class now calls luxuries - gas, food, clothing, health care, etc.
