The bailout mission
When President Barack Obama signed his mega stimulus package in February, it was nothing less than a big cash advance for ‘keeping the American dream alive in our time.’ Since then, Mr. President has left no stones unturned to bring the economy back on track. Plan after plan has flooded from his desk to push the economy out of the mess.
The latest, of course, is the plan for toxic assets. The plan, which involves private-public participation, aims at creating some liquidity for about $1 trillion worth of toxic assets. These assets have not only burdened the banks for quite some time now, but are also hindering the confidence of the global financial system. But the million dollar question remains, are these plans really working?
A confident President
Well, Mr. President certainly believes so, though he also admits the fact that it definitely needs more time and patience. In a recent news conference, President Obama said, “It’s important to remember that this crisis didn’t happen overnight and it didn’t result from any one action or decision. It took many years and many failures to lead us here. And it will take many months and many different solutions to lead us out.” Yes Sir! That’s true for sure.
However, it is possible only when your cash advance flows in the market enriching its liquidity, and not when it just enters the deep pockets of top executives as bonuses. But then, considering it as just one of its own kind, one must set it aside and evaluate all other aspects of the stimulus package before passing any opinion.
Some success
Meanwhile, Obama’s mega bailout package launched last month seems to be doing well at few fronts like saving the jobs of teachers, and police officers. And going by Obama’s words, “it’s creating construction jobs to rebuild roads and bridges.”
Definitely, this will help in adding stability to the financial health of a small portion of the mass. This success, immaterial of its size, must have added some positive energy in Obama’s heart in his battle against the economic turmoil. But it’s just the beginning; he has a long way to go.
The final bolt
The second stage of the ambitious plan is definitely going to be a real challenge as it aims at achieving the dual goal of stabilizing the housing market and cleaning up the mess from the banking system. In the meantime, as Obama confirms that up to 40 percent of all mortgages are now eligible for refinancing and the house prices are now stabilizing after a long time, it definitely boosts the confidence levels of those who believe in the stimulus package.
But all eyes are now set on the new plan for toxic assets because if it comes out good, it can really bring a great turn around in the current gloomy conditions. However, its success depends a lot on private investors’ interest in buying those toxic assets. Which means recovery of the banking system now actually depends on cash advances from the private investors to the banks.
I certainly hope that the cash advance is working, because we’ve gone over a trillion dollars in the hole so far, and the noises the fed has been making lately sounds like we’re going in for another trillion. Two Trillion dollars – we’re going to be paying this off until Doomsday!