Well today is the last day in September and the DOW was down by 777 points yesterday. That is the largest drop ever, point wise not percentage wise. None the less, it is evident that our economy is on a slippery slope towards a recession. Now, as congress is back home taking angry calls and emails, the market is treading water until a financial plan is passed. The problem is who knows when that lifesaver will be cast? Both Democrats and Republicans cast 'no' votes yesterday; they did this for different reasons. The "fiscally conservative" republicans disagree with the basic premise of the bill. They do not think that the Government should be potentially responsible for the mortgages of over 3 million homes. They also don't think the money given to Sec. Paulson is a fiscally responsible solution. A government insurance based program is circulating as their alternative. On the other hand, "liberal" democrats want Wall Street to be held more responsible and more benefits to be given to the general public. This means that compromise will be very hard to achieve; a completely different piece of legislation will likely be necessary. Personally, I can see both sides of the debate. As an average Joe, I would love to see some of these CEOs get theirs for taking a huge gamble. However, as an employee of a financial institution, I know how important it is for our economy not to be crippled by a recession. As banks topple all around us, the people on Main Street will begin to notice in huge ways. It will be harder and harder to get financing for all types of loans as banks become scared to lend money to each other. What happens if Bank A loans 200 million to Bank B and a week later, Bank B collapses? This affects us down on Main St because our employers, big and large, need loans for payroll, material, expansion, renovation...and so on. As these loans dry up, employment will suffer. First, there will be no new hires and eventually lay offs. This is already happening all around the country. I know, I know, this all seems so gloomy, but we have to be honest with ourselves because we know our politicians may not be. How many times have you heard our President and others dance around our economic issues, fearful to say the r-word. It is only lately that we have heard talk on our dire situation. My question is: Why did we wait until the credit market has literally frozen up to do something about it? I know there are tons of smart and capable people in the government that should have seen this coming from a mile away...
The plan may not be perfect, but nothing that passes will be. We need something passed and soon.
What do you think?
-Jon
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