Giving Credit Where it’s Due

CEOs of AIG, Citibank and others have much to be thankful for this year. The government has saved their profit margins and secured their savings for their annual sunsoaking trip to Belise in their private jet. Meanwhile, Salvation Army prepares to feed 3,000 people in downtown Detroit this morning alone. I am not a economist but the numbers still leave my eyes burning.

In the last three months, the unemployment rate rose from 6.1 to 6.5 percent with a total increase of unemployed persons now at 10.1 million in the U.S.  Treasury Secretary Henry Paulson syncretic move? He decided to use $200 billion dollars, part of the U.S. government’s 800 B initiative to revive credit markets, to increase credit card limits for the average American.  The idea is certainly to increase spending and jump start the economy, but giving people plastic is the most ridiculous way to help people. There is once again no accountability or forethought given to the great debt this will take the Federal Deficit into! 

When the average weekly earnings of an American working full-time is currently $720 for the third economic quarter, how credit cards turn into anything but lifelong servitude to a laundry list of credit card companies? The Consumer Federation of America and other lobbying agencies are encouraging Congress to include legislation in the bail out package to curb credit card companies from illegally hiking up their interest prices on existing card holders. In the recently passed Emergency Economic Stabilization Act, market transparency and financial oversight of credit card companies will be monitored by the U.S. government.

Will this system work? Will the government be able to help the average American balance their check book? I don’t see how this solution can be anything but a bandaid until the unemployment rate drops and food prices start to decrease.

We need farm aid in order to increase production and lower the prices for basic commodities. Regulation on loans without high interest rates is also needed to generate small business income. And we need an increase in the productivity of projects under the departments of public transportation, water and sanitation which will in turn increase the number of jobs available to Americans. It’s only logical. And that doesn’t an economist to deduct.

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