Bailout f lies in the face of fiscal responsibility

Mark D. Alger, Henderson

Sunday, Oct. 5, 2008 | 2:07 a.m.

Although the federal bailout will free up the credit markets, it does not fully address the economic problems facing this country. The housing market will continue to struggle. Unemployment will continue to rise.

The bailout will have negative effects on the economy. The dollar’s free fall will continue. In the long term, inflation will escalate. Some individuals and the federal government have been living beyond their means. We are trying to maintain a standard of living while borrowing against the future.

In 1991 we had approximately $3 trillion in debt. We will soon break the $10 trillion mark, with no end in sight. Foreign investors have been financing our spending spree. If they should “dump” our treasuries, we could face an even bigger crisis. There is an adage, “you can’t borrow your way to prosperity,” but we keep trying.

It seems there have been more speculation and bubbles the past few years. We are just putting the high-tech bubble behind us, and now we are dealing with the housing bubble. The housing bubble was quite predictable, yet few experts and economists saw it coming.

One final note: Wall Street and Washington believe that artificially low interest rates are a panacea for our economy. Unfortunately, artificially low rates contributed to our present crisis. Borrowers take on more debt than they should and investors take higher risks to enhance their yields (i.e., subprime mortgages).

Today’s economic problems are complex and extensive and cannot be corrected overnight with a magic wand. We need to start planning long term and to be fiscally responsible.