My point of view of this rescue plan

9/28/08

I believe everyone knows what is the meaning of this bailout plan. I am not going to reprint the content of it. But I would like to express my though here. First, this plan is not going to make any new jobs in our continent ( zero new job ). Second, it cannot guarantee any banks would re-start their will or ability to lend to anyone easier than before. Third, as matter of fact, with mergers or acquisitions in any industries( especially in financial industry), there must be some jobs got to be eliminated. It means the unemployment rate will surely keep going up. Forth, government may have chance to even make money out of it( this is dreaming statement that unrealistic at all ). How?! Are we going to have sub-prime or even alt-A mortgage loans anymore? Two or more years in very low interest for banks to get easy money to lend? Unregulated mortgage practice would still exist anymore? ...lots of reason behind to make our Housing bubbles from year 2001-2006. The answer is very clear to anyone. Then for near future( at least for coming 5 to 10 years), it is unrealistic the average housing price would reach back or close to the top of housing bubble. It means those toxic mortgage backed assets ( All garbage-so called the total amount of $700 billions ) would not come back the same value relative to the tops of housing bubble. Also, no one knows when is the housing bottom so far. As I always say, I use my analysis based on average 3 to 6 months housing data to find the bottom ( It is more statistical & accurate to pinpoint the bottom ) rather given any hope of only 1 to 2 months of good figures. Yes, it will be late call but since none of housing experts or economists has successfully predicts it ( They have been calling the bottom words since beginning of year 2007 ). Therefore, no one knows how long those financial firms keep throwing their garbage to us. Since one of the major roots to cause this mess is the collapse of housing bubble. Not until the price/demand/supply of housing market find the equilibrium, the problem still exist and keep growing. Fifth, it is very certain US government has to raise the interest rate of US bonds to attract more buyers because of this rescue plan ( $700 billions is raising from issuing more bonds or just printing more dollars bills ) either of those action would sink our dollar values relative to other countries' currency. Sixth, we are far putting too much faith in the health of JP Morgan Chase, Bank of America, and Citigroup( the worst of 3 since it is still holding more than $500 billions of bad loans in its off balance sheet). If one of them fail, the game is over. Given recent takeover and complexity, the odd of being a significant mistake are high.
These are some points that I think this rescue plan will not work at all. Only time will tell I am wrong or right. But one sure thing now no one cannot deny is US has already in recession. Are we going into pro-long recession, depression or whatever you say is 50-50. However, I make my words that We are into phase one of great depression. Period.