As I’m sure folks know by now, the US House of Representatives has defeated the bailout bill.
What follows is my own personal opinion. Disclaimers are put forth – I am not an economist, a financial investor, or particularly savvy in us world markets. I have, however, spent a lot of time reading, listening to level-headed reporting and commentary.
I think we’re in deep doodoo.
My opinion is that the US lawmakers just took the side of localized petty politics, instead of doing what is right for the nation. And we’re not talking about this whole “main street vs wall street” BS that’s been bandied about. To me that’s a distraction away from the real issues.
Most people don’t understand how the larger financial markets work. They think ‘credit’ is a bank loan to buy a car. It isn’t. The global credit market is about the hundreds of billions of dollars that are exchanged every night in short term credit between banks and businesses. This is about a production plant in Wisconsin that normally needs $1,000,000 a day to operate. The night before, the bookmakers say “We’re short $100k. We need a loan”. They call up their broker, say “Gimme $1,000,000, I’ll pay you back on Thursday”. They get the loan, the plant functions another day, they bring in $1.1million on Thursday, and pay off the loan. Done.
That is how industrial and business credit works. It is the lifeblood of our economy.
If that loan can’t happen, that plant either operates at a loss, or they shut down for the day. That daily shutdown means instead of making $900,000 that day, they make zero.
Which is worse?
This credit cycle is what this bill is… er… was… designed to protect. It was to keep the markets alive and ease the credit tensions so the banks wouldn’t continue jacking up the interest rates on those short-term loans, thereby making it very difficult for a business to make money on a day to day basis. There’s already stress on this market, already ‘credit freezes’ going on. Businesses unable to get the short term loans necessary to function. Now it’ll just get worse.
Unfortunately, the politicians and the general US population doesn’t understand this. They just see fat cat Wall street folks getting zillion dollar paychecks, and other people getting foreclosed on houses. They vote down what might have been the only thing that could have kept the banks in business, and the credit flowing.
IMHO, we are now in serious danger of a depression. And frankly, I’m scared.
Thank you Washington. You may have killed us all.
About Dave Shevett
A wandering geek. Toys, shiny things, pursuits and distractions.
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The bill that was before the house was for an arbitrary number that they later admitted had been pulled out of thin air. It also had no oversight, nor any reward for the taxpayers in footing the bill.
They voted down THIS BILL, because it was a BAD BILL, not because we don’t need to take serious action (and soon).
Without getting into specifics, it did in fact have oversight. That was the amendment that was put on after it was presented. (well, one of the amendments – there were many). Do you have a cite for the comment ‘later admitted they pulled out of thin air’?
The serious action, I fear, is not going to happen. This is not a populist move, this is not something that everyone has to go “Yay!” about, because that will never happen.
IMHO, anything the HoR will be able to pass will be ineffective, and too late. As far as I know, there is no other bill on the table, therefore nothing will happen before recess. The members will go home and start campaigning.
Stock up on your guns and ammo, folks.
I assume that he’s talking about the comment from an anonymous Treasury source who said of the $700 billion figure, “It’s not based on any particular data point…. We just wanted to choose a really large number.”
And yes, I know that this bill only would have covered $250 billion in immediate relief, but it addressed up to $700 billion over the next year or so, so I think it’s fair to say that they were working with the same “really large number” here as before.
I’ve pretty much spent my adult life preparing for this sort of thing, starting with the cold war, through Y2K and 9/11.
We have pretty much no debt, our own water supply and lots of firewood, ammo and food source.
And we’re a long ways from the closest city.
My neighbors agree.
Our lifestyle is our protection. We are all in food production, and that won’t stop being a source of income, whether it be cash or barter.
I am not worried at all, which is why we live this way. Let it all go to shit. I’m with George Carlin (again)on this one.
There is an interesting mix of people who voted no-more conservative Repubs, more left-leaning Dems, and Repubs up for reelection.
There are some people who will vote nay no matter what-Kucinich, Paul and Flake, for instance.
Before you blame the government, consider that CongressCritters widely reported that constituent feedback ran about 100:1 against bailing out those overpaid bankers that got us into this mess in the first place.
The Rep whose constituency includes Wall Street was agonizing on All Things Considering about how to vote for a bill that’s good for his constituents but bad for the country as a whole.
On Calming Down, Not Celebrating And Getting It Right, David Sirota – paragraphs 4-6.