Never mind what you believed at the beginning. Most never believed Paulson anyway. Now even the believers, unless they are working for this Administration in some fashion or another, no longer believe. How can they?
It is pretty simple and laid out nicely by Eric Fry:
By Eric Fry
08/10/10 Laguna Beach, California – Inviting a little bit of government policy to interact with private enterprise is like inviting a little family of rats to interact with a bakery. Before long, you’ve got more rat droppings than chocolate sprinkles atop your cupcakes. And that’s just the beginning…
Every day, the rats are more numerous, more rotund…and more brazen. Every day, fewer baked goods make it from the oven to the display case. Eventually, the baker is in business to feed the rats…and there is nothing he can really do about it.
Feeding rats is expensive.
It costs money to support a rat-friendly environment. It costs money to finance bailouts, stimulus packages, liquidity injections, quantitative easings, health care reforms, financial reforms, emergency lending facilities. It costs real money that comes from real people…in some way, shape or form.
To maintain a rat-friendly environment, you’ve got to raise taxes or print dollars…or both.
Two years ago, most investors cheered the staggeringly expensive bailout schemes of then-Treasury Secretary, Henry Paulson. Hank simply reached into his bag of tricks, pulled out a few trillion dollars of bailouts and guarantees and scattered them like pixie dust over lower Manhattan.
Within a few months, the stock market was rallying and the economy was showing signs of life. The crisis was averted and Hank’s rescue mission did not seem to cost anything at all. But now we know that this
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