One More Thought

I have recently learned that I do have at least one reader. Thank you. I must re-double my efforts and try to make this endeavor better each day. I think it will be fun.

Politician Formula

Another interesting thought I have had yesterday and today is that politicians certainly have an interesting formula for dealing with this. If you are a politician, you know the American people are tired of the constant, reactionary bickering that prevails between Democrats and Republicans. You know we are tired of the blame game and the constant partisan fighting. You also know that this is a real financial crisis we are facing and if there was a time to set aside partisan fighting and petty selfishness, this would be that time. But you simply cannot resist. So being a politician, this is what you do. "The Republicans caused all these financial problems, and especially Pres. Bush, but we are going to pass this bill together and prevent a crisis and then make sure another one does not happen." "I cannot believe Sen. Pelosi made that speech that cost all those votes, but we need to work together and solve this problem." "Sen. Obama did not do anything to help bring more Democratic votes to the bill, but we need to move beyond politics and pass a bill that will help America." "Sen. McCain could not get a single representative from Arizona to approve the bill, but we need to come together as a Congress and pass this bill."

You see the formula? Blame (insert Democrat/Republican), but we need to stop fighting and work together. I am tired of the blaming and the fighting and I say a pox on both your houses.

I should say that most, but not all, of the politicians I have heard react in this way. There are a very limited few, Democrats and Republicans, that are more mature and serious, but it is a very limited few.

It is times like this that I am reminded of the words of John Adams.

... [W]e have no government armed with power capable of contending with
human passions unbridled by morality and religion. Avarice, ambition,
revenge, or gallantry, would break the strongest cords of our Constitution as a
whale goes through a net. Our Constitution was made only for a moral and
religious people. It is wholly inadequate to the government of any
other.

Results

Did you think the bailout was a bad idea? Then yesterday you got your wish. What was the result? The biggest loss in the market. . .ever . . . ever in history. That is big. The financial estimates I heard said about 1.1 trillion dollars in capital were lost yesterday. This is the amount lost because the bailout did not happen. I must say that 700 billion is a big number, but I think 1.1 trillion is bigger. And where did that 1.1 trillion come from? It came from ordinary people like you and me that have money in a 401(k) and other, similar investments. Can that 1.1 trillion come back? Sure, but it will probably take years to actually get it back, and that is if the bailout still happens.

Another financial analyst I heard said something I thought funny. Everyone is so upset that there are so many executives out there whose companies will go under, but their "golden parachutes" will basically protect them from the fallout. The funny part is that the bailout legislation had a provision against "golden parachutes," so by not passing the bill, Congress (and the public that told Congress not to pass the bill) saved those golden parachutes for the executives.

I also found it interesting that world markets reacted badly to the news that Congress did not bail out the financial market. I was a bit surprised to see the Australian Prime Minister on American TV asking Congress to pass the bill. Apparently, we are still the world economic leader, which is a thought that gives me pause.

The other good news for those that did not like the bailout bill is that any similar bill will certainly not be passed for a few more days. It will be interesting to see what the markets do in the meantime. This piece from the New York Times says stocks were mixed today, and even rebounded slightly. The interesting thing to me is the reason that was given: "The action of the markets reflected optimism that Congress will act this week to approve an economic rescue plan." I guess we will have to wait and see. I am not holding my breath.

To Bailout Or Not To Bailout

As most Americans today, I have been trying to follow the information about the actions, or in-actions, of Congress with regard to the bailout. One of the best articles I have read about it is from Dean Barnett. Another great source in my opinion is Hugh Hewitt's blog (see blog list on this site) and all the links Prof. Hewitt provides. My bottom line is this. The "bailout" may not be an accurate description of the legislation because the bad loans the government would buy are "low" right now, but could very well rebound and even make taxpayers money when/if the real estate markets rebounds. The reason the government would buy these bad loans is to get them off the books of the various financial institutions and because the government is the only organization that can absorb and ride-out this type of bad investment. I also happen to think the government probably should do this since it was government action, specifically laws passed by Congress, that got us into this mess. The bottom line is that a lot of the real financial experts I have heard or read say we need to pass the legislation that would prevent this crisis, or lessen this crisis. As for the politicians, I think the Democrats and the Republicans are currently acting like children. This is the time to fix the problem, not try to fix the blame. I have seen too many Democrats and Republicans engaging in partisan fighting while a real problem grows and grows. Shame on them all.

McCain's Plan?

If this plan works as described by Dick Morris and Eileen McGann, it would be quite the victory for Sen. McCain. It would also clearly demonstrate the difference between Sen. McCain and Sen. Obama. The election could become very interesting very quickly.

No Spin on Financial Crisis

This article from Steven Pearlstein at the Washington Post is about as clear and concise as it gets with respect to the financial crisis. Congress needs to act, and act now.

Case Against Bailout

Here is a great article about why we should not bailout the financial market. I wish I knew enough about economics to really know whether the bailout was a good idea or not. At times like this I tend to fall back on the idea that this is why we have a representative government and I will just have to deal with whatever decision the government officials make. Also, it looks like Congress may actually be agreeing to the bailout anyway, so I will just accept that. In some ways, I am not sure it makes much difference. I have no doubt that bailing out the financial markets will have negative consequences, and I also have no doubt that not bailing out the financial markets will have negative consequences. It is definitely a pick your poison choice. I do tend to doubt that the economy would simply collapse the way so many seem to predict. I do not want to believe the economy is that fragile.