First of all, I don't think that there is any way for me to have an absolute opinion on the so-called "rescue bill" and that is probably true for most thinking people. If you are an ideologue, on either side of the isle, then you can shoot from the hip and defend your position. The truth, however, may not reside at either end of the spectrum and may be found somewhere in the middle.
There is no doubt that the Bush Administration bears a huge amount of responsibility for this financial debacle but greed on Wall Street and yes, greed on Main Street has also played a big part. The greed on Wall Street has been very visible, with golden parachutes for millions, obscene spending on birthday parties, gifts, and travel. Alan Fishman, the 18 day CEO of WaMu has just stated he will not accept his 11 million dollar severance package but has made no comment on his 7.5 million dollar signing bonus. Well what the heck, he did sign.
On the other hand, the housing bust has been not only the fault of sub-prime mortgages, but the people that bought these homes are also part of the blame. There were mortgage originators, real estate people, builders, and developers that all played the game. The residents of Main Street have demanded more and more; bigger homes, bigger cars, private schools, second homes, expensive toys and much of this was paid for with credit.
Recent figures show that there are 1.5 billion credit cards in this country that averages out to 9 cards a person. A car dealer told me recently, that it is very rare to see a buyer that does not have at least $10,000 of credit card debt and many a lot more.
We have builders and developers building as many houses as the market would bear; real estate and mortgage companies wanting to lend money, along with banks that were raking in the profits and buyers obsessed with "newer, bigger, better," and then came the end. We have an administration that has not only created a war that is costing 10 billion a month, but insisted on giving huge tax cuts. We have seen the dollar fall to all time lows, leading to a huge spike in oil prices that have resulted in $4 per gal. at the pump. We have continued to see a huge trade deficit, and a debt that is now over 9 trillion. In 2017 Social Security will pay out more than it takes in and a few years after that it will be broke. It is very much like the "perfect storm" -- with too many things coming to the same place at the same time. But, what about the bailout?
AIG, Lehman, and Goldman Sachs together had over 160,000 employees, a number larger than many American cities and the collapse of these companies have had a devastating effect on Wall Street, that not only has had effect on Main Street but world financial markets as well. It is not so much about bailing out Wall Street, as it is the danger of doing nothing. "Let the market take care of itself", is the cry of some and that is exactly what happened in the 30's except the market did not take care of itself.
We already have people living in "tent cities" and to sit back and just let the market take care of it seems a bit dangerous. The fact that Goldman Sachs paid on an average over $500,000 to each of it's employees is obscene, but people that had jobs for years, until recent events and are now living in a tent, is worse. When people like Warren Buffet warn of the perils of doing nothing, I think he has a bit more creditability with me, than the fringe people that say things like, "do away with the Fed."
The cost of doing nothing may be much more than we are all willing to pay.
