Every so often I read an article that very nearly perfectly reflects my views on the bailout and stimulus packages. This is one of them, at least from the perspective that we’ve really solved nothing but instead are actually deeper in debt than before.
How is it possible to solve a crisis rooted in debt by going deeper in debt?
That’s a good question, and more and more financial professionals are asking the same thing. The following article is well worth reading in its entirety at the link below. Be sure to pay attention to the last sentence, as we’ll be spending some time on that very topic over the next few weeks.
(September 21, 2009) It’s amazing but true. Even after all we’ve been through and all we have supposedly learned about the danger of being over leveraged and borrowing more than you can pay back, we are still piling on debt.
I know that’s not what you hear in the media. Wall Street and Washington are busy telling you that we are continuing to pay down debt and the health of the country’s balance sheet is improving. The truth is that consumers and businesses are paying down debt but their budgetary prudence is more than being offset by the profligacy of the government.
We can see from the Flow of Funds quarterly report put out by the Federal Reserve that households are reducing their debt at a 1.7% annual rate and business at a 1.8% annual rate.
by geoman076