When we try to deconstruct the panic on Wall Street we create the fear on Main Street, where it is tough to break through the technical jargon so that we can all truly understanding what is actually going on. What is clear is that this latest economic avalanche makes the future look seriously grim.
As a country, we are already at war; gas and fuel prices show no signs of dropping, and we are facing some serious world issues, from nuclear weapons in the hands of possibly hostile leaders to the consequences of global warming. Additionally, American workers are seeing their hard-earned retirement accounts disappear before their eyes.
It all seems too dismal, too dour to even think of.
But, let’s not all throw in the towel just yet. Let’s look a little closer at that $700 billion bailout that was rejected by Washington this week.
Those in Congress who voted against the Emergency Economic Stabilization Act on Monday were not willing to just give Treasure Secretary Henry Paulson all that money without thinking about the overall ramifications and keeping the American taxpayers in mind.
They rejected it because they thought the plan was seriously flawed.
“The bill asked for a blank check,” said Arizona Republican leader John Shadegg after it went down. “It did not specify what they did. The vote against the measure was solidly bipartisan.”
Others who weighed in said that Congress did indeed make the right move.
“There were no limitations on what prices could be paid for the debt, and U.S. Treasury Secretary Henry M. “Hank” Paulson and U.S. Federal Reserve Chairman Ben S. Benmarke so committed to the scheme that the taxpayer would not have been present at the negotiating table,” said Martin Hutchinson of Money Morning.
The tanking stock market may have illustrated something – dare we say – hopeful.
Possibly a realization that the market has changed - that the subprime mortgages and securitized assets it thought were so solid were speculative, and that maybe a world of lower asset prices can also be one of increasing incomes and economic growth.
Sure it will take time, no doubt, but perhaps once stock prices are lower (some yielding six percent can be found), the U.S. middle class will be able to save and invest in stocks that will grow. Then the U.S. deficit could slowly begin to decrease because imports will no longer be artificially inflated and the funding problems of government will become more manageable.
Are we out of the woods? Far from it. But perhaps something can emerge from all this aside from an apocalyptic meltdown for contemporary times.