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Bush Warns of Long Recession Without Bailout

By: Steve Johnson

9/24/2008 - 30 Comments

In a historical event that will be talked about for years to come, President Bush addressed the nation tonight to warn the public of the largest financial crisis since the Great Depression. 

The administration proposing the $700 billion bailout to congress has been meeting with congress for the past few days, trying to convince congress to pass the bill for the largest expansion of government in history.  

At this point, credit markets have frozen at large banks have run out of cash and cannot sell their mortgage assets because of the decline in housing prices and the flood of foreclosed homes on the market. 

The bailout plan would buy up the mortgage assets from large banks at bubble values so they will have enough cash to withstand the market crisis without running out of money. 

The two leaders at the forefront of this bailout, Federal Reserve Chairman Ben Bernanke and Treasure Secretary Henry Paulson have been working to solve the credit crisis since last August.  Both men have said many times that the sub-prime mortgage crisis was 'contained'

 The sub-prime sector on the broader housing market will likely be limited,” Ben Bernanke, Federal Reserve Chairman, Forbes.com - May 17th, 2007

The fallout in sub-prime mortgages ... is largely contained." , Treasury Secretary Henry Paulson, MarketWatch.com, March 13th, 2007

Time and time again, Ben Bernanke said that the problem has been avoided. 

"substantial downturn appears to have waned", Ben Bernanke, Federal Reserve Chairman, money.cnn.com, June 10th, 2008 

Yet here we are facing the largest financial crisis since the Great Depression and we are suppose to trust these guys that have been wrong so many times.  The only politician that has been right is Sen. Ron Paul, which has been ignored for decades. Maybe it's time to ask Sen. Ron Paul what he would do.
 
In President Bush's address tonight, he tried to balance telling the public the seriousness of the crisis while trying not to provoke a panic and increase the risk of bank runs.  He needs public support so that congress will pass the bailout bill, by telling the public that our entire financial security is at risk. Our jobs, our investments and our retirement is all at risk, but don't panic, everything will be just fine.  The bailout bill will fix everything. 
 
I think the bailout is a bad idea and I reject the notion that it's our only option. We have the smartest economic leaders in the world, how could this be our only option?  It's too much money put under too few people.  

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