Obama’s 800-billion Bailout Plan Might Actually Work - Don Fang Daily (China)

[Tierra_y_Libertad]

The writer also points out the down-side of the bailout further down in the article. But, at least, it seems to offer something to the common folk rather than the money-bosses.

http://watchingamerica.com/News/13843/obama%E2%80%99s-800-billion-bailout-plan-might-actually-work/

The macro-economy keeps deteriorating and the crisis in financial sector continues to hinder the real economy. Under such circumstances, the Federal Reserve immediately issued an $800-billion bailout plan upon the time when Obama is moving in and Bush is moving out of the White House. The plan announced on November 25 is entitled “Term Asset-Backed Securities Loan Facility” (TALF), aiming to rejuvenate consumption and mortgage credit as well as to rehabilitate people’s confidence in the stock market by offering unprecedented financing support.

Quoting from the Federal Reserve’s press release on November 25, 2008, TALF, “will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS).”

These ABS are, “collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).” By dong so, the Federal Reserve is killing two birds with one stone. On the one hand, it is pressing financial institutes’ “hesitation to loan” further by using non-recourse mortgage. On the other hand, it prevents the drop of America’s consumption need and consumer confidence by reducing the occurrence of the violation of AAA-rated consumption mortgage.

While the financial crisis is deeply impacting the real economy of the U.S. as well as the world, the real economy’s negative effects on the financial market are gradually unveiling. As the “negative feedback” between the largest two economic systems becomes intensified, there is no doubt that the U.S. economy will come to a recession. To stop the situation from becoming worse and to prevent the negative feedback between financial system and real economy from becoming more intensified, it is necessary to link the key sections in the middle of the two systems. For example, to bring back people’s confidence in consumption credit and mortgage. The $800-billion bailout plan is an excellent move that shows its real value in helping to apply such proposal.

Although the U.S. is still undergoing a big-time change, this new bailout plan is already Obama-approved. It is much different from Bush’s $700-billion bailout plan in the sense that Bush the Republican, representing the elites, was trying to save financial institutions by acquiring their bad assets. As for Obama of the Democratic Party, owning a much broader base of civilians, is looking at increasing the amount of the tax that will be refunded to people as well as enhancing the protection of consumption credit and mortgage to boost people’s confidence. The shift from “institute favored” to “people favored,” this is why American people’s confidence to consume has recorded an unexpected rise lately.