What logic are you using to claim that the bailout is the cause of the continued downturn on the market? It has been passed but hasn't even started being implemented by Paulsen yet. Its pretty clear that the market's downward spiral is caused by the lack of available credit, not the bailout which is designed to bring liquidity back to the market.
Dan | 10.09.08 - 9:10 am | #

Dan,

The perception was the bailout would be passed, and all would be right with the world. The message spun by Congress and the Administration was: "We need to pass this ASAP to protect the markets." No one understands the point you just brought up. This is one of those cases where perception is reality.
Mario Burgos | Homepage | 10.10.08 - 5:14 am | #

Nonsense. The bailout was never about propping up share prices, its about letting companies continue to operate so that they can recover. We can all look at the DJIA every day and freak out about our 401k's and IRAs but as long as the companies can actually operate (which requires credit) those share prices can come back up again.

You seem to be confusing the economy with the stock market. The stock market is a trailing indicator of the economy, not a leading one. I'm not going to say that the bailout succeeded because its too early to tell either way. A lot of the continued drop we're seeing is the result of the end of the short-sell moratorium. Hedge funds are cleaning up on short selling right now, profiting off of the rumors about Merrill Lynch and other companies that Hedge Funds themselves created and propagated.

You claim that "most Democrats believe that the government can provide solutions to every social issue and economic challenge." Without going into your definition of "most" I'd like to point out that the GOP party platform also believes that big government is the solution to what it perceives as social problems (such as abortion and gay marriage, both which the GOP wants Big Government to make illegal) and believes that the market is the solution to all problems created by the market. The GOP is furiously pointing fingers at Bill Clinton but the fact is that it was the financial firms that chose to unbalance their assets with mortgage backed securities and they did so in a purely free market fashion.

The free market is the key to the economic success of western civilization but people who believe that it can fix all economic problems (and that those problems are all caused by government interference) are being willfully ignorant of both economics and history.
Dan | 10.10.08 - 8:35 am | #