Editor,
In previous letters, I've expressed my concern for our highly leveraged economy. The current situation has underscored my reasoning. As I have struggled to understand how things got this way, it makes me simply want to hug my kids and say, "I'm sorry."
It sounds like the Bush administration's bailout proposal is mainly about boosting the confidence of investors and speculators in the global credit market so we can continue to package and sell our immense debt and ship our cash overseas rather than keep it in U.S. banks.
But it seems the gig is finally up, and the credit economy/housing bubble is popping. The politicians will predictably try to delay the brunt of consequences until next year by kicking the can down the road with a bailout. Yet I'm taking bets on whether hyperinflation or deflation will soon follow. Maybe we should just buy up the mortgages that are dead or in trouble to prevent foreclosures and let it go at that. I've heard estimates that it would cost about $100 billion. I can see that AIG needs to have a good rating in order to issue insurance on bonds with a high rating for investment. So buying out AIG was probably necessary and could be a good deal in the long run. But we need a small transaction tax to stop speculation before the packaging of debt for sale continues. We've had it before, and it worked.
Also, maybe the Fed needs to be nationalized. It is no longer functional to us as a private entity, and it's clear they are too much in bed with Wall Street fat cats. Oh well, one nice thing about living in a poor "manaña" state like New Mexico is that we have more time and less distance to fall as the economy sours. I'm really glad the fishing is still good here.
Bill Niendorff
UNM student
Get content from The Daily Lobo delivered to your inbox
