Stimulus Package
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It is a question that everyone wishes they had the answer to. One of the first things Barack Obama did while being elected into office was issue the Emergency Economic Stabilization Act of 2008 or
better known as the stimulus plan. In my opinion the stimulus plan was a response to the economy that gave the United States Secretary of the Treasury power to make a $700 billion plan to give money to mortgage companies, and to insert money into some of the banks. In my
opinion the governments stimulus package is a failure because we are still in a recession. Even though the stimulus package has created some jobs the unemployment rate in the United States is still at a high 9%. I feel that with my extensive amount of research that I have enough proof to
show why the stimulus package has been a failure. Some of the reasons I have to back this up are the bank bailouts, the bad economy, and the deficit for the future generations.
One of the big reasons for the stimulus package being a failure is because of the bailouts to banks. A very good article explaining the bailouts more in-depth is “Financial Bailout” which is written by Thomas J. Billitteri. Billitteri describes how the government acquired mortgage
companies Fannie Mae and Freddie Mac. These companies combined accumulate $5.4 trillion in loans. Almost all of the loans are mortgage loans that accumulate for approximately forty-five percent of the total by the world. The government put $250 billion to banks directly. This was aimed for banks to start lending to one another again which it a vital part to stop the nations credit woes. Another important event was when the Treasury Department would let the Lehman Brothers Holdings to go bankrupt. The Treasury Secretary, Henry M. Paulson Jr read a statement saying that there would be no more bailouts by the government. Paulson later said “I am confident in the resilience of our capital markets, and in the commitment of the United States regulators and market participants to work together through this difficult period.” The New York Times reports that about 45 percent of the nations total and Fannie Mae during 2005 and 2008 guaranteed at least $270 billion in risky loans. Another example is when Barry Ritholtz, a Wall street analyst said “one you bail out Lockheed for $250 million under the guise of national defense, its a short line to Chrysler and to the S&L crisis and to Fannie and Freddie. It just gets worse and worse.”
These all show why the economy is the way it is right now. Another part of the stimulus package was to revive the housing market. There are many reasons why the financial system has nearly collapsed. One reason could be the horrible real estate market that had record low interest rates. This caused a huge housing market question that let even people with bad credit to refinance on homes. This was a huge gamble that didnt pay off because millions of homeowners were found owing a lot more money than their homes were actually worth. This led to an increase in mortgages