Burning Questions

I need some enlightenment.  I have a few questions about our economic situation.  I know a lot of you people out there have an enormous amount of education behind you, so I am hoping that you can help me with some answers.

First off, our safest investments such as Treasuries, are backed by the full faith and credit of the United States.  General obligations of our government are of the first tier of safety.  Thus they carry the highest ratings, and are the first, ahead of riskier investments, to be paid off  in the event of financial catastrophe.  I am also aware of the fact that money right now is defensively flowing into these instruments as a safe haven.  Likewise, even foreign investors and foreign governments are putting their funds into U.S. treasuries.  Here is my question:  at what point will the “full faith and credit” of the U.S. NOT be a draw?  What will be the saturation point where all of our bloated borrowing actually cancels out any faith and credit of our government?  Will there be such a point?  Will there be any warning signs that our dollar, based on our economic policies and corruption, will fall to an actual value of worthlessness, which in fact will be a reflection that our government no longer has any faith or credit?

Second question:  we are in a credit crunch.  I understand the bailout is designed to inject billions of dollars into the system in the hopes of freeing up capital.  However, major banks are STILL not loaning money to their fellow banks, much less to businesses and individuals.  Fear?  Or perhaps greed?  Both.  These major players are not loosening up their belts because at current interest rates, they do NOT stand to make much money.  So what good will this huge infusion of funds have if there is no requirement by their lender, i.e. the U.S. government, i.e. the American taxpayer, to actually put those funds out there for real borrowing?  In other words, what good will the bailout have if there is no compliance requirement?

Third question:  with the objective of stemming bank failures, large banks have swallowed up smaller, less viable banks.  Now the resulting institutions are huge, much bigger than they were before.  Is this sound economic policy?  If we are bailing out banks today at the cost of the American taxpayer, putting them at major risk for the future of actually seeing their “investments” returned, why are we creating infinitely larger financial companies?  If anything goes wrong with these megabanks in the future, it will be even more imperative that we bail them out further.  So why are we allowing a depressed, if not dying industry, to consolidate in such a reckless manner?   Roseanne Roseannadanna’s adage that “anything worth doing is worth overdoing” scares the living daylights out of me when applied to this banking situation.  I interpret this as a dire omen for the future.  Can you convince me otherwise?

I have many more questions.  However let’s start with some answers to the above ones.  In my postings, I have tried to educate you, entertain you and keep you off the streets.  I need YOUR answers now.  Please help me out here.  Here are your points of reference: Question 1) faith and credit; Question 2) compliance; Question 3) adding insult to injury.

Looking ahead, for your efforts, I have more funnies and Sarah Palin denouements with which to reward you.

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One Response to “Burning Questions”

  1. Jamie Holts Says:

    Do you do blogroll exchanging? If you want to exchange links let me know.

    Email me back if you’re interested.

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