The Bank Bailout - French America

I am deeply disturbed by the bank bailout presently being undertaken by our Federal government. It seems that every day I wake up to a headline about how our country is taking us a step closer to economic socialism. We are economically approximating France.

Today, the news is that our government may take a direct investment stake in thousands of United States banks, healthy as well as sick banks - prop up an unsustainable debtor system. The markets love security and money only - not freedom, and the DJIA rallied 936 points, the biggest point gain in history.

The America I know and love is slipping into the annals of history. It is frightening. People are looking to government for economic salvation - to rescue us from the consequences of deficit and high risk living. Huge imbalances have been built into the financial system, and people are simply not willing to take responsibility and pay the painful price, and let the capitalist system correct and adjust which is the only way out of this mess. The U.S. Government, in its panicked attempt to stem the losses and the pain, is willing to take us only further in, like it or not.

In the words of Michael Shedlock, one of my favorite bloggers on the subject, you cannot plug a broken dam with water - which is exactly what our government is doing as it floods the market with cheap loans and money - with the perverse and illogical reasoning that this new liquidity will overcome an extended period of easy credit.

I understand that the government is simply trying to prevent collapse, by restoring confidence, but in reality, they are only eroding the account balance and credit worthiness of the United States. And many people see it for what it is.

It cannot and will not last, as it is not based on solid principals. It will just transfer the systemic risk which is built into the banking sector to the U.S. Government and the taxpayer. And there will be a huge price to pay in inflation or repayment. I read the insurance on the risk of default on government bonds has quadrupled. I guess I am not the only one thinking this way.