Tags: ron | paul | depression

Ron Paul: Prepare for the Worst

By Ellen Chang   |   Friday, 06 Nov 2009 05:15 PM

The immense government bailout to boost the economy will result in a return to the worst days of the 1930s, says Ron Paul, Republican congressman of Texas and one-time candidate for president.

“What is likely happening is a repeat of the Great Depression,” Paul warns.

The economy has not rebounded but instead a “false recovery is under way,” Paul writes in Forbes.

“I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble,” he said.

The result of the central bank dumping trillions of dollars will be a “bubble” that will later deflate, Paul said.

“Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers,” he said.

Paul believes that the government has instead created a more “severe” outcome.

“Even with the massive interventions, unemployment is near 10 percent and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion.

“Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?”

GMAC, the lender which has already received two government bailouts, could receive a third infusion of cash, sources tell Bloomberg.

“It’s outrageous that the taxpayers are being asked yet again to support a troubled enterprise,” Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania told the news service.

The support from the government is only “making life more difficult for the firms that have to compete with GMAC, the local banks that have to compete for funding, the other finance companies, the other automobile manufacturers,” Egan said.

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The immense government bailout to boost the economy will result in a return to the worst days of the 1930s, says Ron Paul, Republican congressman of Texas and one-time candidate for president.“What is likely happening is a repeat of the Great Depression,” Paul warns.The...
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2009-15-06
 

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