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Reasons for US Opposition to the Bailout

By Anthony Wayne

There are many reasons politicians oppose the bailout of Wall Street and financial institutions. Some are based on ideology, and many politicians are responding to constituent opposition to the bailout. Financial markets, including the interbank Forex, are reacting to the failure of the US congress to pass the bailout bill. Reaction to the bailout failure from foreign sources has not been positive and financial markets are frozen. For readers outside the US, here are some reasons why so many oppose the bailout.

US taxpayers do not feel they should be held responsible for the greed and irresponsibility of Wall Street traders. The middle class in the US feels they are already overtaxed and burdened with rising food and fuel prices and are in no mood to bail out traders and executives who should have known better.

As hard as it may be for those outside the US to understand, Americans by and large have an aversion to 'socialism.' The American financial system was built on the ideals of free market capitalism and the belief that markets, if left to themselves, will self correct. Most in the US feel it is improper for the government to bailout firms because of reckless investments and greed.

The original Bush plan had no provisions to guarantee that the bankers who are responsible for this crisis will feel any of the financial pain that the average taxpayer is bound to feel as the result of the crisis. Us taxpayers are not in a good mood and are demanding provisions that those responsible for the crisis lose their money first and in no way benefit from a massive infusion of cash into the financial sector.

Section 8 of the Bush proposal reads, '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.' Clearly this section would block any oversight or intervention by the congress and the courts and is seen as giving the treasury unprecedented power. Many do not trust the Bush administration to act in the interest of the average citizen.

If Wall Street firms know that if they act recklessly in the future the government will be there to compensate them for irresponsibility there is no incentive for those same firms to act responsibly in the future.

President Bush estimated the cost of the Iraq war at $50 billion dollars and the cost now stands somewhere in the neighborhood of $585 billion, considerably more than the original estimated cost. The proposed bailout would cost American taxpayers $700 billion more leaving government with a debt that it will take generations to pay.

If the bailout proceeds some economists believe that the US dollar will lose value affecting the other currencies pegged to the dollar. Global financial markets would be affected, limiting opportunities in Forex markets and stifling investment.

In the near future the US will have to make some very tough decisions. Credit markets remain all but frozen a factor which is sure to reverberate through international markets. While there may still be Forex opportunities these may be limited in the near future.

About the author

Anthony Wayne works in the marketing department of the Forex Information site Forex Opportunity in Pennsylvania. He is also editor of the Internet Bingo Blog a great source of internet bingo information.

This article was found at WellWisher.org.

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