Thursday, November 13, 2008, AM | Leave Comment
The government has abandoned the original centerpiece of its $700 billion rescue effort for the financial system and will not use the money to purchase troubled bank assets.
On Wednesday, Nov. 12, 2008, Treasury secretary, also know as the Bailer-In-Chief, Mr. Paulson said 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.
Mr. Paulson says he would like to use much of the remaining $350 billion to support consumer debt – the credit cards, auto loans and student loans that in regular times fuel much of the nation’s spending but have since ground to a halt.
Stimulus fever is in the air. President-elect Barack Obama is hot for a rescue plan for the middle class, signaling that more domestic dollar diplomacy is to come. Press reports say the figure could be as high as $500 billion.
But where does the money from these plans go?
The Institute for Financial Literacy examined this very issue and asked consumers where they planned to spend their rebates before the last go-round:
Almost one-half (48%) said they would use the cash to pay down debt.
The second most popular answer was that consumers would put the cash into savings.
Spending was third at just 13%. The fear was that consumers would be fiscally responsible, and thus blunt the intended effects of the rebates.
We must wise up
That means the consumers are wise enough to put a break on free spending and use the money for their needs rather than their wishes. W must start living within our means and just be debt free.
Some economists say that consumers’ debt is good for the national economy. That’s how some businesses make money like banks. However, we should not pile up debt on our shoulders that we cannot bear. As long as it is manageable and we can pay it on time, I suppose it should be OK.
But debt-free must have a different feeling. You must feel freedom, I mean real freedom. It is not just freedom of speech and everything else that goes with it, but freedom from debt is up there with it as well.
Trust and Credibility
The markets, any kind, run for the most part on trust and credibility of our financial system. Trust and credibility lost is hard to regain quickly.
It will take time for everyone to rebound. U.S. is not a small boat that someone can turn it around within minutes. It’s a huge ship, the largest in the world. To turn it around will take time and a tremendous effort on the part of the executive and legislative branches as well as every citizen of this land.