Economic madness or genius??Who's to say what will be the outcome of the unprecedented scale of George Bush's latest interference in the market economy. In a move that is supposed to balance out the effects of the credit crunch the US President is gambling $700bn of the American people's money on the premise that you can buy your way out of a natural slump in the market.
One need look no further than the national debt of the USA to figure how this is going to be paid for... on credit, the USA already has a national debt running upwards of ten trillion dollars - Most people have a hard enough time thinking about what a billion dollars would look like, I openly admit that I can't get my head around a trillion...
The US government has committed to buy "mortgage-related assets from any financial institution having its headquarters in the United States." There are further measures proposed that will support non-US companies that are active in the US mortgage market.
The effect on the stock markets around the world has been immediately positive, but this is very early days and the market has time to show whether it can be bought off for $700bn...
In the economic climate calling for individuals to keep a lid on their personal debt, there is something fundamentally wrong, it seems to me for a further $700bn of debt to be incurred in order to 'fix' the leak. Time will tell if the calculations are near the mark, or whether this is a hugely unsuccessful gamble made by an administration on it's way out - one thing is for sure, Mr Bush won't be the one picking up the pieces if it all goes wrong.
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