Article: Main Street's Pyrrhic Victory

Much of the political left, with a good dose of help from libertarians and fiscal conservatives, have been mobilizing to defeat the financial bailout plan. Congressional representatives in the House have been bombarded with emails, faxes and phone calls, in some cases running 100:1 against the legislation. The pressure was greater than anything Congress has faced in decades.

Those opposing the legislation were victorious, but chances are that the celebrations will be short-lived as banks continue to fail, interbank loans are denied, payroll loans are rejected, and the financial domino effect spirals out of control. Passage of the legislation was certain to reduce confidence in the US’s ability to repay its mounting debt, but that is not the most pressing current financial problem. Right now, those on Main Street need to worry about their current employer’s solvency and credit lines. As credit markets freeze further, both domestically and internationally, the ability of employers to continue paying employees will be in jeopardy.

It is impossible to tell how far the domino effect will spread if bank-to-bank, and then bank-to-business loans continue to fail, including payroll loans. That puts further pressure on the mortgage loan system, because more people will undoubtedly default on their mortgages.

It is also difficult to tell which businesses will begin to fail first, but they are likely to be in sectors that are already hard hit, like automobile manufacture and sales, airlines, construction, and financial services.

Main Street failed to organize to stop the Iraq war, to begin impeachment hearings, or to hold the Bush administration accountable for spying, torture, privatizing war, or any other malfeasance. But Main Street did finally organize to write and call Congress and put enough pressure on them to stop the economic bailout that would have kept banks solvent, at least for now. But they are going to find soon that it was a classic Pyrrhic victory, where few are left unscathed to enjoy the outcome.