In the last week Americans got a small taste of what the economy would look like if the government did not pass this necessary bail out. An economy with ‘frozen credit’ would make life for the average American even harder at this point. We found that it wouldn’t just be the banks without credit, but small businesses, auto buyers, home owners would also suffer. On top of this all monetary flow to the state government would halt.                                           

“So now that Congress has handed $700 billion to Treasury Secretary Henry Paulson, he'd better spend it wisely. Congress handed Paulson a reprieve; now he needs to spend some time putting together a real plan. The one he's proposed so far makes absolutely no sense.

 What does he need to fix? For starters, the "auction" mechanism for the federal government to buy the plan won't work. Auctions work best for homogeneous assets and a field of buyers. The federal government is the only bidder for these assets, and they're all unique - how will the Treasury know what to spend on them? By taking Wall Street's word?Secondly, the government made a huge mistake in offering to buy all assets. We'll say it again: our problems originated in the mortgage market. Why, then, should taxpayers get stuck with bills for bad car loans, defaulted credit cards, and whatever else financial institutions manage to heave onto the Fed's balance sheet? Agreeing to take over anything, from all comers, is a recipe for fraud and abuse."

So we go back to the question, is the bailout worse then no bail out. On the one hand, we will be helping the few people that put us in this evil mess. But on the other hand there is a possibility that if the government didn’t pass out this bailout our economy would suffer greatly.  We may not be able to avoid a recession in out economy (with or without this bailout), but hopefully it will keep us from falling into a second depression.