Why the "Bailout" Failed

Tuesday, September 30, 2008

Why the "Bailout" Failed

This financial crisis has not been adequately explained to the American public and the "bailout" is not an actual "bailout of Wall Street." Wall Street is already pretty well screwed. Banks will continue to close, investment bankers are going to lose their jobs, a lot of rich people will become substantially less rich. What the more aptly named "rescue plan" is about is trying to stop the Wall Street financial crisis-- fueled by greed and deregulation-- from crashing down on Main Street in the form of a credit crisis.

Here is what people need to know-- most companies and small businesses rely on credit to make payroll. Some businesses NEED credit for people to buy their products-- car sales, real estate (residential and commerical), student loans, etc. If credit dries up for a long period of time we're looking at widespread layoffs as businesses contract-- many businesses will close altogether. We have a economy that is driven by consumerism-- if the money dries up so does the economy in general. If the stock market tanks it will hurt the average person, either directly by shrinking their 401k or pension, or indirectly by harming the economy in general.

This could lead to systemic failure that will hurt A LOT of people in the short-term and be hard to get out of in the mid and long-term. A "rescue" from the government is intended to keep credit available so that much of this won't happen-- it won't stop the pain completely but it's the difference between a kick in the head or someone chopping your legs off at the knees.

As I see it those who are supporting the bill as a necessary evil have not done enough to educate the public. The Bush Administration royally screwed up when they introduced the "bailout" in the first place-- they failed to educate everyone about why this is needed and they completely underestimated how little trust the American public has in Bush and his administration. It goes way beyond the fact that Bush is a lame duck-- he's the least popular lame duck evah.

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