You *do* realize what will happen if the credit markets freeze entirely, don't you?
Finance is run on "just-in-time" as much as manufacturing; and in addition to companies financing operations through bonds (long term debt) instead of stocks (because Congress has made debt tax-advantaged and equity tax penalized), many companies (and banks!!) rely on short-term paper to buy inventory *and* to meet payroll.
No credit...no paychecks, and involuntary bankruptcy.
The problem is that the mark-to-market feature of Sarbanes Oxley is biting everyone on the ass. If a commercial or an investment bank needs to raise cash by selling real estate (or derivatives based on them), and has to do it fast, then the price *drops*. That's ok, let the greedy slimebages pay? Great, except the "mark-to-market" feature has now devalued EVERYONE's collateral and derivatives based on that collateral -- causing the need to sell more property to meet margin requirements (in a fractional reserve sense, not in a TD Waterhouse stock account sense) -- thus driving values down even more.
There is not enough *cash* available to back up all the credit commitments -- some funds are leveraged 30-40 to 1.
It is analogous to the human body going into shock, or, in other respects, to a "race condition" on a database.
The answer is to use the government not to "bail them out" but to "backstop" -- two ideas are to lend the companies money at LIBOR + some percent (so the govt. makes a profit), or to buy some of the worst properties, and SELL THEM BACK at a higher price later.
There was an article on FR yesterday about what was done in Sweden in a similar crisis -- it looked like a good idea from what I could see.
Cheers!
The last thing I knew, John McCain was still running for President. He's simply chosen to put a temporary hold on his campaign, to head back to Washington at a critical time in the nation's economy. It's no different than him holding off on the beginning of the convention because of Gustav.
As of tomorrow, I believe Congress was planning on heading home to campaign for their respective offices, and wouldn't be back until after the elections in November. Is this bailout something that should be put off until after the elections? Or rushed through without proper consideration? I see Bambi got an offer he couldn't refuse from President Bush, and ended up going back to Washington anyway. It would have looked a whole lot better for him if he'd joined McCain initially, and accepted the invitation from the beginning. His flip comment, "If they need me, they can call me," was in very poor taste. He's always saying that McCain doesn't get it, well, Obama doesn't get it either.
As far as suspending the debate, I doubt it will make any difference anyway. The majority of the people who plan to vote have already made up their minds who they are voting for. Elections are not decided by debates. And in reality, the "meetings" they have between candidates can hardly be called true debates.
Please remember that as far as Lincoln, and Madison goes, Presidential campaigns were a lot different than they are now. There wasn't TV, internet, or air travel. Lincoln left Springfield in February of 1861 and never got back again until after his death. And in 1864, Lincoln thought his chances of winning the election were pretty slim.
TV broadcasts started in the early 40's, and I'm not sure just how much of the political campaigns were televised in the early days. As a kid in the early 50's, I can remember my father watching the Democrat Convention on our black and white TV. Adlai Stevenson was the party's nominee in both '52 and '56. I grew up in a Democrat house. My first ballot was cast for Hubert Humphrey, because that's who my father said I had to vote for. Thank God for Ronald Reagan, because that's when I finally came to my senses. If my Dad were alive today, he wouldn't even recognize his party anymore.
Granted things would hopefully not get as bad as during the Great Depression. I grew up listening to my parents talk about how bad it was. I also grew up in the 50's (born in '47), and lived through the Cold War. Unfortunately, Russia is once again rattling their sabers, the Muzzies are trying to take over the world, Iran is threatening Israel and us, China is poisoning everyone, and North Korea is once again being problematic. It's not as if there weren't threats out there. At any time, one or more of those issues could get out of hand. You just never know.
The thing that pi$$es me off about this whole housing bailout is that I've never owned a house or piece of property in my 61 years. Yet, I'll be paying on mortgages that people never should have gotten to begin with. I raised two sons alone. I could have used a house back when my kids were little, but that was during the Carter years, and I never would have been able to afford a mortgage, let alone pay for any repairs to a house. Now that I'm retired, I don't have the need for a house. I live in a very affordable 2-bedroom apartment in central New York State. If something breaks, the landlord has to fix it.
It will be interesting to see how this all plays out in the end. I'd love to see the people responsible for this mess brought to justice. I'd love to see the Democrats once and for all, take responsibility for the mess they've made of the economy. I'm glad to see that the FBI is investigating all of this, and hope that the truth will finally come out, but whether that is ever allowed to happen remains to be seen.