"The Sky Is Falling," Cried Chicken Little
The hysteria about the imminent collapse of everything we hold near and dear is based on a big lie. The party line has it that if the government doesn't come through with its bailout there will be a huge crisis of confidence which will cause lenders to stop lending, businesses won't be able to get the money they need to keep going, jobs will be lost, and nobody will be able to buy anything so they can pay off bum loans. What crisis of conficence? Lending is supposed to be about doing due dilligence and having confidence the borrower can pay it back. Don't lend to dead beats, which is what got them into this mess, that and lending to dead beats to buy wildly overvalued property. So what they're telling us is that confidence in the markets must be restored so lending institutions can go back to making loans nobody in his right mind would have confidence in. Weren't we once told "neither a borrower nor a lender be?"
posted by John M Crowther @ 6:42 AM
3 Comments:
Hey, a banker lends money in good faith and the borrower should have to prove that he or she has the capacity to pay back. Okay, so what if maybe a few greedy guys let a few homeless couples living in cardboard boxes buy mansions overlooking the golf course, but what is America all about if we don’t have faith in the basic goodness and responsibility of our citizenry. You liberals know as well as I do that the average Joe and Jane, even a homeless Joe and Jane, intends to pay back so if we give our Treasury secretary, Mr. Paulson, what he wants –no strings attached—chances are he’ll get most of it back, and, as for the rest, you know damn well that China’ll cover the rest. With all the take-out joints they have here, they have a bigger stake in our economy making it than we do.
Gosh... we need to be careful what we wish for here John. That trillion-dollar-plus plunge on Monday was no furphy. Loss of confidence in financial markets will have far reaching consequences reverberating far beyond the local housing market. Everyone everywhere will suffer. And how. The bailout won't guarantee it won't happen but it might just shore up confidence enough to stabilise the markets for a short time. Without significant regulatory change the climate of corruption still exists. There should be international monetary laws in place so when a country's economy goes pear-shaped through unregulated poor practises it cannot take the rest of the world down with it. Alas... this is not the case. We are all beholden to the other. There is no quick (or easy) fix I am sad to say. (Just my opinion of course)
This is a case of we are damned if we do and damned if we don't. If it were only the fat cats on Wall St. then I would say let them hang out to dry but unfortunately it affects all of us. I did not like the original bailout but can reluctantly see the amended bill will have to be passed in order not to have world wide panic. This is the fault of both parties going back to the early 1990s, including Greenspan. I am so tired of both parties pointing at the other as the culprit, all the petty bickering is childish, unnecessary and simple stupid. Do they really think that most of the public will believe it is all the fault of one party or the other? Only the radicals in both parties will buy into that rhetoric. This is a runaway train wreck waiting to happen and it had lots of engineers driving it.
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