If you have remotely paid attention at all in the past year to the stock market, you will know that Uncle Sam has done everything in his power to turn this market around. Let’s look at a list of actions taken this year alone to provide Wall Street and everyone with a 401k, a false sense of security:

  1. Lowered the Fed Funds rate by 125 Basis Points (1.25%) in less than 10 days.
  2. Lowered the Fed Funds rate by 325 Basis Points (3.25%) since September 18.
  3. Helped JP Morgan bail out Bear Stearns in March ’08 by guaranteeing $30 billion of high-risk BSC assets.
  4. $150 billion to Send out stimulus checks of $600 per single and $1200 per married couple, along with $300 per child to all working families, spending billions in the process, not to mention $32 million just to inform people they would be receiving a check.
  5. $200 billion (estimated) to rescue Fannie Mae and Freddie Mac from collapsing.
  6. $300 billion potentially in relief to those who are about to lose their homes or foreclose on them.
  7. $85 billion to take over the largest insurer in American International Group (AIG).
  8. $700 billion bailout of the financial industry (pending passage through Congress and President).


Add them all up and you’re talking a good possibility that we spend $1.4 trillion dollars to end this financial mess the US and its politicians has gotten itself into.

The point is, with all of the people’s money (and please don’t think that it’s the government’s money) that has been spent we are still in the same situation that we were in back in January. Falling stock prices, failing banks, and folks losing their homes.

Face it, Keynesian Economics doesn’t work. We’ve spent over a trillion dollars this year alone trying to prop up the stock market and the economy as a whole and it has done virtually nothing to date. It’s not that money can’t fix the problem, but I believe that if the federal government would just let the free markets take its course, yes it would be extremely painful and maybe even at one point we hit 7,000 or 8,000 on the Dow, but that pain would be much quicker, and an eventual recover much sooner.

In fact, I honestly believe had the government been hands off with the entire housing meltdown we would have been on the road to recovery by now and the final impact probably known and understood better than it is now. Instead we are still wondering when the bleeding is going to stop and when the financial markets will finally turnaround.

Let the chips fall where they may and at the end we’ll be better for it. {easycomments}