|September 25th, 2008 by Robert | Word Count: 797 | Reading Time 3:12||2,410 views|
To bailout or not to bailout, that is the question. We’ve been inundated over the last week with words such as bailout, meltdown, Wall Street versus Main Street, foreclosures, economic crisis, and even the most dastardly economic terms known to the financial man… recession or even, (say it with a low voice, we don’t want to be overheard), depression. Nobody wants a recession or something much worse, that’s a fundamental fact. But, even with a government sponsored bailout, are our financial markets going to be set upon clear waters for free sailing? I don’t think so, but that doesn’t necessarily mean the bailout isn’t necessary.
The shambles of our current economy scares the majority of Americans. When our homes and property come under fire, our fear creates destructive undercurrents within our financial sector. Negative tones from the market feed our fear and society begins looking to save their livelihood. The issues have infected the everyday person, not just the investment banker, stock trader, mortgage firm, or Wall Street giant. Society hobbles along when the major firms take hits, but it comes to a screeching halt when your local town begins to see the effects of a national financial crisis.
Yank the money from the bank, pull the funds from the stock market, and start living as if money in the form of cash is the only way to protect your family’s investment. That is what some are doing in fears of losing everything. When we see our savings and retirement accounts plummeting because of the fickle and volatile stock market, we get antsy and start pulling money from the system. As more and more people feel the pressure, fear continues to feed the monster and before we know it, we are in a full scale crisis, or disaster.
Fear and negative speculation play a very large role in how our economy works. To replace these two nasty demons, we must have confidence in our markets. We must be confident that at some point, our money will be returned to us intact, with interest for our risk assumption. If we fail to have confidence in our financial markets, they will fail, immediately. This is the juncture we are at. Mom and pop, and even the next door neighbor, are worried about their future and they hear fear mongering and dire reports on each and every news report. They see people losing jobs and houses as well as families being destroyed by money “disappearing.”
We are at a point where our economy is teetering on the edge of absolute destruction for the near term. Let’s return to the initial question, “Should we allow government to bailout Wall Street?” According to our most gifted economic minds and financial leaders, the answer is yes. But as a taxpayer, the answer is a little hard to swallow because the $700 Billion we are talking about is OUR money. We are the ones at risk now, why should we assume MORE risk if things don’t work out? Not only are our lives on the line now, we are placing our necks firmly under the guillotine with the bailout.
In my opinion, it is a risk we must take or we are more likely to pay an even more extreme price later (the later may not be that much farther down the road). We must realize that the $700 Billion being offered as part of the bailout plan will not fix anything fundamentally. It is a short term fix to release the grasps the demon of fear has upon us. It is a “pill” to fix the confidence problem our economy has. We hear that banks will “loosen” their credit strings with the bailout in place. We hear that home owners will be protected. We hear that the housing market will not implode. We hear that our stock markets will stabilize. We hear… lots of things.
In the end, we must not HEAR, but EXPERIENCE these things, or our tax money, confidence, and livelihoods will disappear completely. There are only so many bailouts that can happen before total economic decay. The dollar can only be diluted so much. Eventually, there will be a price to pay for a short term fix, but the fix is a risk worth taking given the country’s current standing. However, we cannot just move forward happily as things hopefully stabilize. We must fix the underlying problems which created the fiasco we are in. Without that, we will see another issue such as this in our future, but much larger. Patching the wound now gives us time to live without fear and angst, but we must use that time to focus on fixing the root problems… or we will be in the same boat just on a different day.