Financial Analyst: Government bailout means rise in taxes
Story Created:
Sep 22, 2008 at 4:38 PM EDT
Story Updated:
Sep 22, 2008 at 5:09 PM EDT
(WKTV) - There is talk of progress in the Government's potential bailout of the nation's financial institutions. Congress is expected to soon work on the President's proposed $700 billion plan to rescue the economy.
A local financial expert says the bailout would definitely mean our taxes will go up, and it will also effect us when we try to borrow money.
Honorine Wallack, a financial analyst for R-B-C Wealth Management in New Hartford says people first need to understand why we are in the position we are in.
She says when the U.S. Dollar started to deflate, that was the first sign of trouble in our financial world. Then, there were the sub-prime loans - loans offered at a rate above prime to individuals who do not qualify for prime rate loans.
They usually have higher interest rates. Over the past several years millions of borrowers defaulted on their loans, and finally just last week that meant numerous banks and other financial institutions had no money to lend. That's why this proposed $700 billion Government bailout would "unfreeze the nation's credit markets."
Wallack says the bailout will mean our taxes will go up for about the next 30 years, but at least the economy won't collapse and life can go on.
"It won't go on to the extent where you can put 5% down on a house, you can kiss those days goodbye," Wallack said. "And not everyone is going to be able to get credit cards. I think you are already seeing less credit card advertisements coming to the house."
Wallack says the government could make money in the long run once the majority of people pay off their loans. She says we as taxpayers won't recoup our losses, but we will benefiting.
"Well, we're all benefiting right now," Wallack said. "If this happens and this works, we're all benefiting because there's no panic, there's no collapse, there's no crisis and life can go on."
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