$700bn is not enough to avoid a recession, just prolong the slide. It does of course have the effect of saving the bacon, temporarily in my view for the Republicans and those who perpetuated the criminal acts of forcing credit down the throats of the unsuspecting masses. These perpetrators, whether bankers, financiers, lawyers or politicians have a professional moral obligation to society not to their net worth. Society owes them nothing.
What we have now is a plan being presented that is too little, poorly defined and was never going to solve the fundamental problem anyway. Nothing can hide the fact that we are going from boom to bust in the economic cycle. House prices are in free-fall and will drop over 30% top to bottom. This is a certainty. Maybe $3 to $5 trillion of loans are of poor quality. Households have been hit by the surge in commodity prices and the fall in the dollar and a major recession is once again inevitable and required. We do not want to prolong it with unnecessary hand-outs tot he banking industry. Let the recession come, support the most needy and have a plan in place to nationalise the banking sector should things seize up.
Any noise about “domino effects” and “bringing down the world’s economy” are fearmongering. Let the banks go to wall, defend the depositors and the borrowers rights and be there to support those that will suffer the most.