Even More Random Thoughts

Sorry, but I’ve been thinking again.  When you’re an employee, regardless at what level, it’s critical to know who your boss is.   Sometimes, you think you do, and then something happens to let you know he’s not the boss.  He doesn’t call any shots.  Someone else does.  The current economic meltdown has much to say about this important employment principle. 

As I anticipated, Congress bailed in its game of chicken with Wall Street.  While the House of Representatives’ initial intransigence produced high drama, there was never any doubt.

Much has been said about what the bailout means for our country’s future.  There would be no future without the bailout.  Unless the $700 billion package was approved, the Great Depression would look like nothing more than an off-day at a Walmart super store.  Never mind that hundreds of non-Wall Street economists found the bailout to be unnecessary and dangerous.  Never mind that the bailout negates the fundamental principles of free markets and capitalism.

The bailout isn’t about the future.  Even its supporters concede that it may not work.  The government will be buying worthless loans and, at some point, reselling them.  If the bailout loses money after five years, the President must submit a plan to Congress for recouping the losses from the financial industry.  That will produce another financial crisis.  Banks will teeter on the edge of disaster.  To avoid a cataclysmic event, Main Street must again let them off the hook.

The bailout is about the past and present–and who’s the boss.  It confirms who has run this country in the past and who runs it in the present.  Not the American people, the White House, Congress.  Rather, America’s tycoons, whom we’ve just bailed out at their behest.

They created the indecipherable sub-prime financial products (generating more wealth), which led to the housing crisis, the credit crisis, and the bailout. This isn’t for Wall Street, they said.  The bailout is for Main Street, now feeling the sting of the credit markets seizing up.  Payrolls can’t be met.  Layoffs will increase.  College students will drop out of school. 

The credit seizure occurred because financial institutions wouldn’t lend to each other or would only lend at exhorbitant rates.  They had money but hoarded it.  “You think this is just about Wall Street?” they asked.  “We’re dragging Main Street into the abyss.” 

When the bailout stalled in the House and the stock market plunged 777 points, they said, “We told you.  You’ve just caused the people on Main Street to lose billions, maybe trillions, of their retirement savings.”  What they didn’t say is they also control the stock market.  Members of Congress, representing the people on Main Street, cried “Uncle!”

Now laid off workers will be recalled.  Homeowners will pay their mortgages.  Cheap money will be unleashed.  Retirement funds will be restored.  College students will be educated.  The markets will soar.  Main Street is rejoicing.  Its people have been allowed to return to the company store.

1. 

   John Phillips says:

   October 9, 2008 at 9:54 am

   Thanks very much for the mention.