Check out this article from Charles Hugh Smith. (Look for the blog entry with the title the same as mine) It’s good stuff. Tough action will be needed in our future if we’re going to fix this debt problem our whole country is in.
Our government should be ashamed of themselves for all the two faced talk they’ve been giving lately. Paulson says that institutions will need to fail, and then they bail out Fannie and Freddie (sort of, $15B doesn’t go far when a company has debt like they do) so that institutional investors (read, foreign governments, PIMCO, etc) can all get rich, or at least maintain what they have.
In a capitalist economy when a business fails it fails, and the investors lose money. What we have in this country is some kind of hybrid where the owners make money when times are good but when they are bad the downside is pushed onto taxpayers, if the business is deemed important to the greater good. The bad thing is that these businesses are historically reckless because of this potential bailout. There is also a sort of short term mentality with these large corporations. The managers know that they need to get their cash while they can, screw what happens 5 years after they leave their office. It’s a messed up incentive pool.