The sky is falling!
The New Depression is starting! The sky is falling! Banks are going to collapse and take your money! Hedge funds are going to go up in flames tomorrow! A lack of short-term liquidity is going to cause a severe recession!
Okay, no one is yelling that last one, but I think that is the most likely result of the credit and mortgage mess. Some banks and hedge funds will fail. Many people will lose their jobs, and it will be tough to get a loan to buy anything. This one may last for years--other countries have gone through similarly long recessions due to bank credit problems (take Japan and Finland, for instance).
What is the proper role of government in stopping this crisis? A $700 billion bailout failed today in Congress, and the stock market took a long jump with a short rope. Was the bailout the right idea?
A smart politician would say that the bailout was not a perfect solution, but it was good enough for now. It would have stabilized the markets (on the positive). Although it might not have been enough to keep them stable long-term, and it would have been horrifically expensive (about $2800 for every man, woman, and child in the U.S.), it was worth the risk to keep the economy running.
But even if it will cause regular people to lose their jobs and not get car loans, regular people dislike saving Wall Street types from the trouble their reckless greed has brought them. The bailout seems like a desperate, rushed gamble from a president who has cried "Wolf!" once too often. But now, a real wolf is at the door, and the nation is divided at the wrong time.
Are there viable alternatives? Yes. The government could raise the limit on FDIC bank insurance (protecting us little people), provide temporary credit to keep the markets liquid, and send government accountants into every major credit house and bank to open the books and determine which companies are financially sound, and which are not. Making the company books public would greatly help to mend the crisis of confidence in short-term credit that is causing our economy to seize up like a old Chevrolet running a few quarts low.
But do we have time for Washington to come up with another plan? Those old biddies will be arguing while Rome burns, and none of them are currently favoring the ideas above. It's good not to rush, except when it is called for--delay can be a risky proposition when it's your neighbor's house on fire. Waiting for a new, cheaper plan might save you or I a few hundred dollars, even a thousand dollars. But in the end, isn't all that matters is whether I get to keep my job, and you get to keep yours? I'd pay up for that. I bet most people would, too.
When you think about it, I bet the government won't gesture and POOF, $700 billion will disappear overnight. No, they will take time to spend it, and better plans can be made as the markets calm back down. After all, there will be a new president come January, and a new Congress as well. I think they might fix things. At the very least, people will believe it when they tell us that the sky is falling. Really.
Okay, no one is yelling that last one, but I think that is the most likely result of the credit and mortgage mess. Some banks and hedge funds will fail. Many people will lose their jobs, and it will be tough to get a loan to buy anything. This one may last for years--other countries have gone through similarly long recessions due to bank credit problems (take Japan and Finland, for instance).
What is the proper role of government in stopping this crisis? A $700 billion bailout failed today in Congress, and the stock market took a long jump with a short rope. Was the bailout the right idea?
A smart politician would say that the bailout was not a perfect solution, but it was good enough for now. It would have stabilized the markets (on the positive). Although it might not have been enough to keep them stable long-term, and it would have been horrifically expensive (about $2800 for every man, woman, and child in the U.S.), it was worth the risk to keep the economy running.
But even if it will cause regular people to lose their jobs and not get car loans, regular people dislike saving Wall Street types from the trouble their reckless greed has brought them. The bailout seems like a desperate, rushed gamble from a president who has cried "Wolf!" once too often. But now, a real wolf is at the door, and the nation is divided at the wrong time.
Are there viable alternatives? Yes. The government could raise the limit on FDIC bank insurance (protecting us little people), provide temporary credit to keep the markets liquid, and send government accountants into every major credit house and bank to open the books and determine which companies are financially sound, and which are not. Making the company books public would greatly help to mend the crisis of confidence in short-term credit that is causing our economy to seize up like a old Chevrolet running a few quarts low.
But do we have time for Washington to come up with another plan? Those old biddies will be arguing while Rome burns, and none of them are currently favoring the ideas above. It's good not to rush, except when it is called for--delay can be a risky proposition when it's your neighbor's house on fire. Waiting for a new, cheaper plan might save you or I a few hundred dollars, even a thousand dollars. But in the end, isn't all that matters is whether I get to keep my job, and you get to keep yours? I'd pay up for that. I bet most people would, too.
When you think about it, I bet the government won't gesture and POOF, $700 billion will disappear overnight. No, they will take time to spend it, and better plans can be made as the markets calm back down. After all, there will be a new president come January, and a new Congress as well. I think they might fix things. At the very least, people will believe it when they tell us that the sky is falling. Really.
posted by Tree Texan at 10:44 PM
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