While like many Americans, I was stunned about today's massive 777+ point drop in the Dow Jones, but I can't help but think that it would have happened anyway, even if the big $700 billion-dollar bailout had passed the House today.
Why? Well, if you were watching, the stock was down by more than 230 points before they started voting! Maybe if they passed it the Dow would have dropped less, but it still would have dropped. After the failure of the House to pass the bill, the Federal Reserve started dumping money into the market, and even this didn't slow the plummeting Dow.
While I recognize the necessity of the government doing something to help shore up the economy, this bailout bill wasn't the answer. I sat up late last night reading it - all 160 pages of overly complicated, dense language - and frankly, I really couldn't see how it would have been much help at all. It MIGHT - and that's a big MIGHT - have resulted in a bit of a boost to the economy, would do so at the expense of our already-over-burdened federal budget. I must say that it is one of the 'smarter' bills I've read lately, in that it is obvious that a lot of thought went into it, it's actually pretty balanced, but I just couldn't see how it would have helped all that much.
In other words, to talk like the business people do, I didn't see that the return on investment was worth the investment. There were too many, as usual, loopholes
I actually laughed at the idea of any company agreeing to the idea that executive income over $500,000 a year would NOT be tax-deductible! While that's a great idea, what company is going to agree to that, much less what executive sitting on their million-dollar-a-month paycheck going to agree to that? Or agree to having to pay 20% of any golden parachute to the government, just because their failing company got some help through this bill?
The bill did not address one of the key problems of our entire economy: Our economy is way too dependent upon credit. I heard more than a few talking heads today talking about how credit is the "engine" that drives our economy, but not one of them saying that THAT IS THE PROBLEM.
If you (or me) as an average American has to use credit to buy basic needs, such as food, that's a clear sign that you have a economic problem, whether it is not enough income, too much debt, poor financial decisions, or whatever, if you have to resort to credit to buy the essentials to keep the business of your life afloat, then you have a serious problem. (I'm not talking about emergency situations, like sudden illness, natural disasters, etc). The same absolutely MUST be true for a business: If a business has to resort to credit to pay the essentials of that business - payroll, utilities, etc., - then the business has a serious economic problem.
There is nothing wrong with using credit for large purchases, long-term capital investments, research and development, whether it is a house for a family or a new factory for a business. But your business - whether it is your family or a big corporation - must be able to cover the essentials with the existing income BEFORE you take on additional debt. The problem right now in our economy is too many individuals and business rely on credit for the essentials.
Truth be told, I don't really see that we have that much of a credit crunch. There is plenty of credit available for those who have decent credit scores and enough disposable income to make the payments on that credit. What we DO have is a crunch on EASY credit: Banks and other lenders have decided that it isn't good business to loan money to people and businesses that can't afford to pay it back.
Wow... what a concept!
However, this bill failed for the most obvious reason of all: nobody liked it. Not the average American, not most big businesses. Most importantly, it doesn't do anything to help the economy now, and the only help it provides to the average American is through a presupposed "trickle-down" effect. Meaning, help these few big, bloated, borderline-corrupt companies, and maybe, just maybe, a few average Americans might, just might, be a bit better off than they were before.
I sure as heck didn't see it helping me at all. I'll still be stuck living on barely $1,000 a month, fearing the day three years from now when my mortgage modification expires, praying that somehow, someway, I'll be able to improve my income within the next three years.
For sure, I have no sympathy for those idiots at the head of failing businesses and their multi-million-dollar paychecks...but I do sympathize for those thousands upon thousands of low and barely-middle income workers at those same companies who may lose their jobs when their company fails. You know, those people who slave away making $7 to $25 an hour to keep costs down while a few at the top make millions.
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