September 22, 2008
Government Bailout -
As you listen to and read the news about the government bailout of Wall Street, it's important to discern how much this will ultimately cost the US taxpayer. Media loves to hype a BIG number. Hence, we're now hearing numbers like $700 billion being tossed around. There are two forms of government support that can occur, and they are analogous to a home mortgage.
Suppose your friend's house is close to being foreclosed on by the bank that owns the mortgage. The bank might let the friend keep the house, if you simply offer a guarantee on the loan. Alternatively, the bank may require the friend to pay off the loan completely with cash.
Many of the "bailouts" that have occurred so far, are simply guaranteeing financial securities of some very large institutions. For the most part, these guarantees, while in the billions of dollars, won't end up costing any money. They simply offer their "guarantee" that the loan will eventually be paid back. Outright cash infusions by the government, on the other hand, will cost taxpayers completely. But, so far, these have been, thankfully, very rare.
So, as the Wall Street story unfolds, look past the dollar amounts to understand if the government is GIVING away tax dollars, or simply offering it's backing.
RED STATE/BLUE STATE -
I fondly recall the days of my youth, as I watched the presidential returns come across the TV screen. In particular, I recall the Reagan/Carter race of 1980. The three major news outlets all showed the large US map, with Reagan states colored Blue, and Carter states in Red. (It was "seared in my memory", that Republican states were shown in Blue, as that's my favorite color) So it was stunning to me in the late 90's and early 2000's, when suddenly, the news media declared that Republicans would always be Red, while Democrats would be Blue. Frankly, I was outraged. But not just because of my love for the color blue.
In study after study, people associate emotions with colors. Red denotes hot, emotional and volatile. While the color blue is a cool, calm color.
Frankly, I don't know who made the decision on "coloring" the parties, but I'm pretty sure it's the liberally biased media that's trying to gain whatever edge they can for their party of choice.
As you listen to and read the news about the government bailout of Wall Street, it's important to discern how much this will ultimately cost the US taxpayer. Media loves to hype a BIG number. Hence, we're now hearing numbers like $700 billion being tossed around. There are two forms of government support that can occur, and they are analogous to a home mortgage.
Suppose your friend's house is close to being foreclosed on by the bank that owns the mortgage. The bank might let the friend keep the house, if you simply offer a guarantee on the loan. Alternatively, the bank may require the friend to pay off the loan completely with cash.
Many of the "bailouts" that have occurred so far, are simply guaranteeing financial securities of some very large institutions. For the most part, these guarantees, while in the billions of dollars, won't end up costing any money. They simply offer their "guarantee" that the loan will eventually be paid back. Outright cash infusions by the government, on the other hand, will cost taxpayers completely. But, so far, these have been, thankfully, very rare.
So, as the Wall Street story unfolds, look past the dollar amounts to understand if the government is GIVING away tax dollars, or simply offering it's backing.
RED STATE/BLUE STATE -
I fondly recall the days of my youth, as I watched the presidential returns come across the TV screen. In particular, I recall the Reagan/Carter race of 1980. The three major news outlets all showed the large US map, with Reagan states colored Blue, and Carter states in Red. (It was "seared in my memory", that Republican states were shown in Blue, as that's my favorite color) So it was stunning to me in the late 90's and early 2000's, when suddenly, the news media declared that Republicans would always be Red, while Democrats would be Blue. Frankly, I was outraged. But not just because of my love for the color blue.
In study after study, people associate emotions with colors. Red denotes hot, emotional and volatile. While the color blue is a cool, calm color.
Frankly, I don't know who made the decision on "coloring" the parties, but I'm pretty sure it's the liberally biased media that's trying to gain whatever edge they can for their party of choice.
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