Headlines blare "Bailout or else!", and politicians are taking front and center stage across media venues throughout the country. The financial industry stands on the edge of an abyss, or that's what the press wants you to believe. How real is the crisis, and should Congress act quickly at this juncture to restore faith in the financial markets?
The reality is this problem is much like a person who eats fast food through out most of his life. He gets heavy, and doctors and family suggest he go on a diet and eat better foods. But the fast food is just much more enjoyable, and less stress full. So he continues to eat and eat, and then one day he feels a pain in his chest, and soon he's at the doctors office. The doctor basically let's him know that his artery's are clogged and he has very little time to live! There are a couple procedures that may save his life, but he has to make changes in his lifestyle and has to make a decision on what to do about the clogged artery's as soon as possible. But eating right is something that takes time and significant change. What does he do about the immediate problem. There is a big chance that even if he changes his lifestyle that he could still die of a heart attack considering his current situation. The doctor then proposes that he takes a cholesterol reducing drug immediately, along with a bypass, and then he needs to change his lifestyle if he wants to live for any significant period of time.
Wow, this example sounds all to familiar to our present situation involving Wall Street. For years, the bankers have been gorging on fast food and easy money. Now the credit artery's are clogged and if their isn't something done NOW, there could very well be a finical heart attack. Will it kill America....no, but it could affect every man and women in this country in the next few years. Therefore something must be done at this point to restore the confidence in the financial markets. This problem isn't going to be solved by one bailout or many. The long term plan should be to restore confidence in the banking system, through proper money management and the enforcement of "sense-able" regulations.
I've also been hearing allot of the following, " I paid my taxes on time, I didn't spend beyond my means, why should I have to worry about bailing out these fat cat's on Wall Street". The reality is that we all have a stake in Wall Street. If the banking industry collapses, it will have a direct effect on our country. Fewer businesses will be able to expand or even stay in business. This results in higher unemployment, which results in consumer consumption continues to drop, which results in further job loss. The vicious cycle then continues and continues until capital can be released back into the markets. That's called Depression my friends, and those whom advocate that Wall Street GET THEIRS should think this through.
Now one caveat before I end this post. Could our fast food loving example do nothing, change his lifestyle somewhat and still live a productive life. Yep, no one knows for sure. The bailout may do nothing, or it may help keep us out of a sever recession. The real question is if the patient continues to eat fast food, he will surely die, as certainly will our financial system if big changes do not result from this whole Wall Street debacle.
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