U.S. Moves to European Model

We've come just short of the government completely taking over Wall St. According to CNBC, as stated on Kudlow and Company on Oct.13, 2008, the U.S. is moving toward following the European Model of attacking this financial crisis we're in.

The U.S. government will use the $700 billion-dollar bail out package to do the following, as well as buy bad assests from the companies at a significantly discounted price.

- Buy equity stakes in U.S. companies
- Expand deposit insurance
- Guarantee interbank lending

This is a double-edged sword however because on the one hand, we need to save the economy, but on the other hand, it doesn't necessarily seem to punish the companies for their bad behavior. I guess the stock market punished them enough this past week and the government buying equity in them will only devalue their current shareholders.

On the political front. This turn around will still help Democrats. Although the stock market rallied and was up 900+ points today, this will not help Republicans at this stage of the game because Obama has already capitalized on - and continues to ride the wave of the failure of the economy. I think a lot of voters will say, "Wow. good thing things are improving, but let's never go through that again. We need to get some new blood in there to change things up a bit and avoid that crisis again." The other thing Obama has going for him is that his liberal views are more European than most Liberals, so this Europeanization of the U.S. financial system will only validate his view point that American capitalism is fundamentally selfish and wrong.
Unfortunatly it's a Republican administration validating Obama's view point.