Some were FOR it and some were AGAINST it.
The bailout is the only feasible option in fixing the downward spiral which is impacting our economy. Yes, we are headed toward recession, yet it is not the type of recession that economists normally predict or expect. It is a RECESSION of enormous magnitude. The timing, prior to the holiday season, is going to result in massive layoffs in all industries – construction, financial services, and the service industry – being the most susceptible. The economy is dependent on consumer spending in the fourth quarter, yet it is unlikely that such spending will arrive this year, compliments of congressional incompetence and presidential failure.
Some members of Congress voted based on politics, while others understood that there simply was no other alternative. “Free market” Republicans expect the market to correct itself. Government intervention is simply wrong. Ironically, these are the same Republicans that said NO to regulation and oversight under the Bush administration, thereby providing an assist in pushing us into this current environment. When will they understand that a hemorraging market requires the ER and not simply an aspirin?
Then there are members on the other side, particularly the Congressional Black Caucus, who want the government to bail out homeowners, not Wall Street. Unfortunately, while it sounds fine and well serving, a failure in bailing out Wall Street will leave these same homeowner’s without a place to call home.
If the credit situation is left to the “free market” then expect continued layoffs, financial failures, foreclosures, and congressional politics. Small businesses CANNOT function without the credit lines necessary for growth and expansion. The construction industry, already slowing, will grow to a halt as credit lines dry up. If these businesses fail, then unemployment will only continue to climb. Homeowners will then be saddled in larger debt without an avenue out.
It’s imperitive that the political thinking behind such a rescue plan understand that the middle class suffers if no action is taken. Retirement accounts and 401K’s essentially become worthless. Stocks are now a thing of the past since the volatility in the markets has spooked individuals to seek a quick exit and other more stable alternatives. Expect the fall of hedge funds to be next. Many will simply collapse in the next three weeks under the panic of “give me my money.” Which ailing bank will be the next to fall under extreme pressure? Fifth Third? SunTrust? These bank failures are shaking the resolve of the public, yet Congress continues to play politics on both sides of the aisle.
When will people realize that it is not about Wall Street. It’s about our jobs, our homes, and the small businesses which have struggled under this failed administration and the Republican puppets which ceded much of their power to King George.
Unfortunately, in a rush to pass the bailout plan, Congress failed to sell it to the public. There was no Donald Trump, Michael Bloomberg, Bill Gates, or Warren Buffet to step up to the plate. Convincing the American public that Congress is acting in the best intent of taxpayers is what has been missing. The Republican delay tactics did succeed in convincing the public that it was a Wall Street and not Main Street bailout. Conservative commentators, such as Glenn Beck, even understood that the bailout, while undesirable, was the only viable option. Wall Street may be in New York, yet its reach extends across all neighborhoods of this nation.
Americans need to meet reality and understand that the pastry shop around the corner is dependent on banks for their future growth. High school students are dependent on banks for college loans. Local and state governments are also dependent on banks for higher yields on taxpayer investments. How can any of these occur without government intervention. If we allow the current situation to remain unfixed and sit back patiently for the arrival of the free market, then expect the following:
– Higher property taxes. Cities and counties cannot simply reduce their budgets without making drastic cuts, whether it be to schools or public services. Foreclosed properties not only impact the equity in surrounding properties, but it also strains the tax revenue of local jurisdictions.
– Mega monopolies. Such is already occurring and yet, while we’re fixing a current problem, we are also creating a future problem. Allowing a handful of banks to sature markets. Monopolies are not and have not been consumer friendly. We must provide strength to struggling banks and not simply allow the monsters (Chase, Citibank, and Bank of America)to consume their operations.
– Higher unempolyment. The financial service industry has already begun the trend. Expect construction and the service industry to follow very close behind. Most of manufacturing has already been outsourced and the agricultural industry has been dwindling even prior to this crisis.
While I am a firm believer in less government, I also understand the severity of our current situation. I also believe that NO government intervention, as the “free marketers” desire, is largely responsible for our current problem. In this bailout, the government is purchasing assets – bad mortgage loans. There is a risk, yet the risk is low. The likelihood is that the properties will sell at a purchase price greater than the loan itself. Once the property is sold the government would then dispose itself of the bad loan and keep the amount that it invested. The only bad aspect to this is that we have now made the federal government the largest depositer in the nation. However, to somehow expect banks to handle the severity of the situation on their own is ridiculous. They are the parties that have placed us in this perilous situation in the first place.
To expect banks to take out insurance on the bad mortgages, as the free marketers have proposed, is also crazy. Who would want to insure a bad investment? Didn’t the insurance rates of homeowners in Florida and Louisiana go up as a result of Hurricane Andrew and Katrina? Therefore, it’s easy to conclude that the insurance rates on these bad loans would have very high premiums. The result is that consumers, those holding accounts at such banks, would then be charged the additional costs. The insurance proposal also does not provide the immediate fix that the economy requires. Rebates to taxpayers also does not since it does not address the real problem – the inability to secure credit.
It may take more slides in the stock market and the collapse of hedge funds before Congress understands that the time for politics has expired. The only certainty from this whole crisis is that Bush has been assured his place in history. Herbert Hoover must finally be relieved!!!