Bill Clinton Was Lucky

Phill and I were sitting around and found that we share a similar theory on economics and presidents. The economy and the prosperity of the United States in the past 150 years has been purely based on a simple curve of the business cycle. The presidents that we hold in higher regard presided over a time of prosperity. Bill Clinton may just have been lucky and was elected president in the good portion of the business cycle. Both Bush's were elected in the low portion of the curve.

Economics

Today the House of Representatives did not approve the bail-out plan that was presented to them. This immediately caused the stock market to drop more than ever. It seems absurd to me that hey would not pass the bill. Anyone involved in finance and with a good understanding of the system would know that this will happen and would realize that the bail-out proposal is what is needed. There are no other options. The reason that this is being held up, is that people just do not understand economics.

Why is it necessary?

If the financial markets fail so does all of America. The bail-out plan would allow the financial markets to recover and not drag down the rest of the nation and the world. Then is would restructure the organization of the financial system and the institutions that caused the crash would be broken up. But they can not be allowed to go bankrupt and collapse.
The financial market is exactly that. The market that connects business with financial assets. Without this market, businesses would have a much more difficult time financing their operations. The Financial market is an integral part of our system. It collects funds from the ordinary citizens and distributes it to companies. If the market fails, so do companies and so do the American people.

Did we see it coming?
Yes, the United States has been dis-saving for years. This mean that we are living pay check to pay check or living off of credit. Eventually credit will catch up to you and you find you can no longer afford to pay your bills. This is just what happened.

What is going to happens with banks?
Two very large bank appear to have come out of this on top, or they will soon. Bank of America and Citigroup are acquiring many new assets from failing institutions. Right now they are able to increase there size and power at a much lower price than any other time in history. It is as if they are shopping in the clearance section. There are two things that may happen with these banks. They may come out on top and be powerhouses for a few years and then collapse after becoming too large. They may also be on top for a short period of time before being moved to the back by a restructuring of the financial markets. I do not see these banks remaining too large for too long. The new trend will be small institutions.