Word earlier today was that a deal had been struck between Republicans and Democrats on the response to the financial crisis, but apparently it fell though (at around the time McCain got involved, coincidentally). I haven’t yet been able to figure out why. From what I understand, the Democrats had only offered a portion of the $700 billion that Treasury Secretary Hank Paulson was asking for up front, so maybe that was the sticking point. Or maybe is was that hundreds of respected economists started questioning the efficacy of the bailout.
Whatever the reason, it seems as though they’ve hit an impass, which is probably a good thing. I get suspicious when these folks try to motivate us with fear, as they did about six days ago now, when they said that, if they didn’t get $700 billion in cash ASAP, that the world would collapse. Well, it didn’t end, and today we learned from a Treasury spokeswoman how they arrived at the $700 billion figure. If you can believe it, she told “Forbes” that they, “just wanted to choose a really large number.” And, as I mentioned yesterday, the FBI now has a probe underway. I understand that global markets may be in jeopardy, but I’m inclined to say that we should wait until we get to the bottom of this before we start cutting “really large” checks.
I just called the offices of all my elected officials in DC and requested that they make sure, whatever funding package is approved, that it does four things… I want it to 1) ensure sufficient Congressional oversight, 2) cover no executive compensation, 3) include only funding for what is absolutely necessary at this point, making the Treasury come back to Congress later for additional funds if necessary, and 4) make sure that our investment gives us a reasonable chance of making our money back. That means getting equity in exchange for our investment, and not paying more than the fair market rate for what we’re getting. And, here, if you happen to live in my neighborhood, are the phone numbers for our representatives in DC, in case you want to call:
Senator Debbie Stabenow
Phone: 202-224-4822
Senator Carl Levin
Phone: 202-224-6221
Representative John Dingell
Phone: 202-225-4071
Would the world end if these banks failed? The reason I hear that they need to be saved is that, if they fail, credit will be harder to come by. And, credit is what fuels our consumption-driven economy. So, yeah, it would suck for a lot of people, especially people who make things that people don’t really need, if credit became harder to come by. People would be less likely to buy new homes and new cars. But maybe that’s not altogether a bad thing. Instead of hopping from house to bigger house every five years, maybe people would put down roots and stay in one community – making an investment there. And maybe they’d discover mass transportation. But, like I said, a lot of builders and autoworkers would lose their jobs. The transition would undoubtedly be incredibly painful. But maybe it’s necessary. Maybe this is something that would have had to happen anyway. The old way, built on ravenous consumption, wasn’t sustainable in the long run, and we knew it. Sooner or later, this day of reckoning had to come.
