Warning: this is a rant.
I’ve just about had it. Look, this bailout plan is anything but perfect. It’s rushed, flawed, and has too many vote-grabbing concessions, but this is NOT the time to let perfect get in the way of good. The sky is falling people and we, and our leaders, are just looking up with gaping mouths. I think Friedman has done the best job so far of explaining all this in a simple way:
Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.
We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy.
Other than his shameless plug of his own phrase, “the world is flat,” Friedman is dead on here. And I think people are underestimating the severity of the problem here. This is not 1999 .com bubble burst, this is not post-9/11 market hit, this is not a “blip” that will soon be corrected. This is at best the beginning of a significant recession and at worst the beginning of a depression that will realign the global financial system. Either way we need action.
Congress is putting front and center all the reasons this Country no longer believes in it. And it’s right in our back-yard too: Walz, Peterson, Ramstad and Bachmann need to get in line or get out. I appreciate the political pressures here, but man alive(!), we’re not dealing with an immigration bill here or the farm bill or the resolution on BS, we’re talking about the very viability of our economy!
Whether he formulated this speach out of political considerations or his personal convictions (I truly believe its the latter), Obama was dead on yesterday:
Even with all these taxpayer protections, this plan is not perfect. Democrats and Republicans in Congress have legitimate concerns about it. I know many Americans share those concerns. But it is clear that this is what we must do right now to prevent a crisis from turning into a catastrophe. That’s why I’ve been reaching out to leaders in both parties to do whatever I can to help pass this plan. That’s why I’ll be flying back to Washington today to cast my vote to safeguard the American economy. And to the Democrats and Republicans who have opposed this plan, I say – step up to the plate and do what’s right for the country, because the time to act is now.
Congress, take notes, because that’s leadership.
Addendum: For the last week when people would ask my thoughts about the bailout plan I would simply reply that I couldn’t possibly pretend to have enough of an understanding of the complex issues involved or enough information to evaluate the underlying forces at play to come to a competent decision on the matter. Instead, I was willing to allow Paulsen, Frank, Dodd, Bernanke and other lead officials to be the experts here. There’s no doubt that their schedules have been 100% booked with the best experts, the best briefings, and the smartest minds available on this issue; this is why we delegate authority to them. Call it foolish, but I trust in them to parse this information because I don’t have the resources to do so myself. So, the above rant is a reaction not to the sound-bites and traded barbs of the last week, but to the fact that the experts we’ve delegated authority have determined that this is the best course of action. And, credible minds seem to agree that, while not perfect, this is a must. Again, call me foolish for investing my trust in these men, but I ask you whether it is any less foolish to presume that each of us can be experts on the subject.
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Everybody really does need to watch these. They are by no means perfect but they do present a decent outline of the monetary system that is at the core of the current issue.
http://www.chrismartenson.com/crashcourse
My belief is that this bailout “fix” might buy us some time while simultaneously making a long term solution further out of reach.
Re-align the global finance system? Sounds good to me, bring it on. It’s gotta happen sooner or later, so why delay the inevitable.
I don’t think this is a mess we can borrow our way out of. That’s what got us into this mess.
Matt, you’re dead on here.
I know people are unhappy, and I know they don’t like the bailout plan. I understand; the situation sucks. But we clearly need action to keep it from getting even worse. We first need a bailout to eliminate the short-term threats. From there, we will need to seriously re-examine our nation’s financial policies.
Please, don’t pretend like congressmen and women who voted against it have their head in the sand. That is intellectual dishonesty at its highest, and helps no one. Just because the people who helped get us into this mess in the first place think 700 billion dollars is the solution doesn’t mean it’ll be any good. I, for one, welcome the downturn and readjustment. To me that seems way better than delaying the inevitable, printing more money, increasing the national debt, and artificially inflating the price housing and other ‘assets’ like bunk loans. If the economy isn’t allowed to correct, we’ll just be going through this same thing again later, except probably much worse.
I say, let the bad banks fail. Let them write down their toxic paper and liquidate it. The market will handle this just fine and be back to normal in short order. Bail out the people who are affected (via FDIC insurance and other means), but don’t bail out irresponsible behavior on Wall Street.
The sky is not falling. Get over your irrational fear and think a bit more rationally and you’ll be better for it.
Typo?
You wrote: “Instead, I was willing to allow Paulsen, Frank, Dodd, Bernanke and other lead officials to be the experts here.”
I assume you were referring to US Treasury Secretary Hank Paulson (“s-o-n”), not conservative right-wing mud-slinger and soon to be failed candidate for US Congress, Erik Paulsen.