Sorry for the gloomy post but has anyone being paying attention to the news? You may think the current crisis only affects some bankers who have bet their shirts and lost but unbelievably it looks like the US & UK government are stepping in to protect them (at our expense).
The Associated Press: Paulson urges quick action on $700 billion bailout
Former CEO of Investment Bank Goldman Sachs - US Treasury Secretary, Hank Paulson is likely to be given authority to spend trillions of dollars (up to $700 billion at a time) buying 'toxic' debt, ie mortgage securities that are now worthless. There is to be no oversight on which deals are made. They cannot be challenged in Court.
"The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to 700,000,000,000 dollars outstanding at any one time"
"The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation"
"Designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them"
"Sale of Mortgage-Related Assets. The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act."
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency"
The US does not have the money to fund this, so it will be borrowing the money (or simply printing more). Our government may have to borrow £90 billion and is already talking about a 5p rise in income tax to help pay for all this. The jobless rate is predicted to hit 2 million within 18 months and may rise above 1980s levels in the greatest financial crisis since the 1930s.
Financial crisis: Alistair Darling may have to borrow £90 billion and raise taxes, say experts - Telegraph
BBC NEWS | Business | Q&A: Financial crisis and you