Posted on 10/01/2008 7:48:27 AM PDT by reaganaut1
Many people in Washington fear that the country is starting to spiral into a terrible downturn. And to their horror, they see the public, and many members of Congress, turning into modern-day Meyer Mishkins, more interested in punishing Wall Street than saving the economy.
All of which may be true. But there is good reason for the public’s skepticism. The experts and policy makers who so desperately want to take action have failed to tell a compelling story about why they’re so afraid.
It’s not enough to say that markets could freeze up, loans could become impossible to get and the economy could slide into its worst downturn since the Great Depression. For now, the crisis has had little effect on most Americans, beyond their 401(k) statements. So to them, the specter of a depression can sound alarmist, and the $700 billion bill that Congress voted down this week can seem like a bailout for rich scoundrels.
...
Almost no economist thinks that even a terrible downturn would look like the Depression. The government has already responded more aggressively than it did in Herbert Hoover’s day. So a Depression-like contraction — a 30 percent drop in economic activity — is highly unlikely. The country is also far richer today, which means that a much smaller portion of the population is living on the edge of despair. No matter what happens, you’re not likely to see shantytowns.
But the Depression is still relevant, because the basic mechanics of how the economy might fall into a severe recession look quite similar to those that caused the Depression. In both cases, a credit crisis is at the center of the story.
(Excerpt) Read more at nytimes.com ...
When banking committee chairs and members each are major recipients of monies from banking institutions, what other result could have been expected.
Dodd, Franks, Schumer et al should be forced to pay for this. See OpenSecrets.org and follow through the contributions by industries. It is shameful.
I’ve heard from a couple small business owners this morning whose credit lines were not cut off, but were lowered. That just means they can’t buy as much inventory. But if they’re inventory becomes limited, then their sales fall off, and somebody will have to be laid off, and that’s how things start to spiral downward.
Also heard anecdotal reports from two different folks who had Home Equity Lines of credit. Neither had used their lines of credit, and each person’s credit rating was stellar, but their lines of credit were lowered substantially. It’s okay with them because they didn’t use them anyway, but we are going to see a tightening of credit, which will lead to a slowdown in the business sector, which in turn leads to job loss, then government’s have lower revenue, services have to be cut...there is a ripple effect.
I was never for the Paulsen bill in it’s original form, but something will need to be done to make credit available once again to folks/businesses.
The article only goes half way. Yes, there is a lack of trust in Wall Street, and a lack of trust among banks to lend money to each other and to us.
The more important lack of trust, however, is in who is trying to fix the problem. I believe there is a greater lack of trust in the government of the United States. Even before this crisis, the government’s credibility suffered significant erosion. Bush had low approval ratings, Pelosi’s congress even lower. People believe our government is broken.
There is little faith that our broken government, which most people believe had a hand in creating this crisis.People are skeptical that the government is going to fix it.
Here’s my question:
What assurances have we had that the policies that fostered these bad loans have been reversed? Are we going to pump money into the financial sector only to continue the process of loaning money to those who cannot repay?
Well? If such assurances have been made, I certainly have not heard them.
The objection is that it violates our Constitutional liberties by giving to the Executive branch extraordinary powers of the purse without any real oversight or accountability. Yes, the Constitution. Remember that?
And, yes, the big evil that lurks out there if some variation of the Paulson Plan is not passed is not as great as it’s made out to be by the powers that be in DC. Fortunately, it appears that the people understand that.
Before I forget, Bush has truly done all he can on the domestic front to destroy conservatism. While he’s been generally correct on the war against Islamic fundamentalist terrorists, on tax cuts, and in his SC appointments, the rest of his tenure stinks from a conservative perspective.
Its hard for me to trust Congress for a solution because we see Barney Frank front and center as the face of the solution. And Pelosi, I certainly don’t trust my Senators and have just sent each of them, Specter and Casey, my second email of the day.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
That's exactly what they are planning to do with the $ 700 Billion - pump enough air back into the bubble to get us past the election.
All the scare talk about the economy will get Obama and a veto and filibuster proof Congress elected, but they really can't afford to have the economy begin to actually unravel prior to Nov. 4 because that might frighten people so much their reaction might be unpredictable - like voters might decide to toss all the incumbents, not just Republicans from office.
That’s what I thought. The bankers figured out a way to create a panic and extort money out of politicians. The politicians are paying protection money. Our money. When I saw ACORN funding part of the 1st proposal the light went off in my head and I knew where this was going.
We’ve been told day after day “we have to act now.” Haven’t acted yet and where’s the calamity?
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