| XxXProphecyXxX said: LOL OBAMA TO THE RESCUE!!!! |
(While I'm here)
The bail out was one of the dumbest ideas congress ever thought up (and proves not a single one of them understand how economy works). This is why I beleive Obama will be more likely to kill the economy rather then repair it.
The bail out can not work for many reasons, but namely, it throws the competition out of wack. A market can run becuase all of the businesses in the market are competing. Competing is the best thign becuase it can do things such as keep prices low and develop new ideas (such as the Blue Ocean Strategy). Monopolies are bad becuase they destroy competition. This screws the consumer while making the company rich. It is worse when the product has a high nessesity.
The bail out ruins competition buy placing a big handicap on one company. The company is paid by the government. It does not need to worry about competing heavily becuase it gets extra money from the government. This means it does not pay for it's actions; there is no concequence. Make a bad business decision? Oh well, here is 100 billion dollars (this is basically what was going on in the auto industry). Additionally, it nulls the need for other companies to compete. They will either give up or ask the government for money too (the door-in-the-foot phenomenon states the government will soon give out money like candy). The companies can't compete becuase their good ideas and leg ups are null and void since one company can do what ever it wants with no penalty (the government will just give them money despite their mistakes). It's a delicate system. If toyed with too much, it will go out of wack.
There is a lot to it. You can't throw money at problems and expect them to get better. One of my fears with Obama and the democratic congress (and the former's fixation with fixing everything) is they will get these brilliant ideas and implement them. They don't realize they don't know the first thing about how the economy works (besides "It prints money" or "It eats money") and will screw it up. The last time the government got involved without screwing everyting up and doing some good was the reforms and trust bust of the 1900, 1910s.
