What the bill (and Paulson) might do to hurt us

Lone Star Time has a long and educational post up about how Paulson's plan is actually going to hurt us a lot more than it will help us, by taking more money out of the private sector, and forcing folks scared off money market accounts into government bonds.

As investors continue to shift more and more cash from the private money market accounts to government T-Bills, the available cash typically lent to banks for short term loans to business will continue to shrink. The demand for an ever diminishing pool of money will drive up interest rates. Many small businesses will be priced out of the market for loans or turned down in favor of borrowers who can afford the higher rates. The feds are essentially vacuuming up available cash to fund their bailout. It is a recipe for disaster and a guaranteed way to start a long and ugly recession.

And I say again that the passing of the mammoth bill did nothing to calm any market anywhere, and in fact, may have made things worse. It would have been better for Congress to investigate, research, calmly, rationally think of a solution rather than just throw my money at the problem. It obviously hasn't helped anything. And if economists are to be believed, may have hurt us.