Ze Bailout
Consider this your lucky day, because today I tell you my views about the bailout.
Firstly, I would like to tell you my political stance. I consider myself to center-right, but extremely liberal at the same time. The fact that I’ve been living in the US for the past two and half years, coupled with the fact that I’m planning to do a Certificate in Finance in addition to my major (CS, which is) has spurred my interest in US Economics and all the razzmatazz that comes along.
So there is a credit crunch. People spent way too much, saved nothing. The American dream – “Work hard and then get whatever you dreamed about” was misinterpreted to be “Get whatever you dreamed about, then work hard”. But as we all know, motivation does not work in reverse. And now that people have realized their mistakes, they are not willing to commit them again. Which proves that leaving the Economy as it is and ‘let it sort itself out’ agenda is not the most appropriate.
Thats one of the biggest problems I see with tax cuts. Yes, people will have more money in the pockets. Will they spend it? No. They would save it, to protect themselves in the future. This doesn’t help the treasury because they want to get money flowing in the market again. The only solution I see is ensuring more Americans have a constant stream of income, better known as paying jobs. The confidence level has taken a hit, and would be tough to restore unless the common man is assured that spending money, taking loans etc will not lend him/her in to the same kind of trouble.
So as I see it, its paramount for the bailout bill to create jobs for American people – at all levels. Infrastructure projects are good, since they require hiring of a large number of people. Also, the government needs to ensure they don’t enter a trade lockdown with other countries, since it leads to contraction of your market.
Pure speculation – I feel a temporary depreciation of the price of the dollar would do the economy real good. A lower $ value means more foreigners invest in Wall Street and FDIs increase (as can be seen by the sudden surge in stocks at the start of last week). It also means that foreign products get more expensive, hence forcing US companies and individuals to look inwards for alternatives, which in turn increases the domestic cash flow. The Mexican Peso collapse in 1994 is a good example.
Bottom-line – Tax cuts are good, but not a comprehensive solution. Creation of more jobs coupled with smart thinking and decision making of families seems to be the only way to get the economy back on track. Let’s all do our part 
