A solution for the Financial Crisis in the States?

Last Friday, the American Treasury Secretary Henry Paulson told the world he had a solution for the financial crisis in the States: that the American government is to buy all the bad loans. The congress has decided that there is an urgent need for a strategy like this one, in order to protect the taxpayer’s money and release the tense in their financial system. He also stated that it is important to let the money flow to the consumers while this is I progress. However he believes that this program will need plenty of money in order to get the best and maximum effect, maybe hundreds of billion dollars if it’s needed. Next wee the congress will make the more precise decisions.

There are many different aspects in this matter, and it raises many different opinions about the outcome this program might get. One way of looking at it is that the taxpayers will have to pay for this. Even tough Mr. Paulson states that it is important with credit flows and that the money that will go into this program will not be the taxpayers’, the money has to come from somewhere, and they FED can’t take all the reserves. The States all ready has a National debt of 9,5 trillion. This will eventually affect the taxpayers. At the same time there is an election coming up soon: Bush talks about cutting taxes, Obama talks about better medical aid, care and social security and Mc Cain talks about building up the army.

However there is another way to look at this financial salvation program. I believe it is highly unlikely that the FED will loose more money then they can win in the long run if nothing is done about this crisis, and it has to be done soon in order to prevent recession. However it is of high importance that these financial arrangements should aim to prevent the “sellouts” of the money market.

So the question to ask is whether the U.S. government is big enough to take on this whole problem themselves? Well, they have to start somewhere.