September 28, 2008
I felt compelled to write Pat Tiberi again dealing with the ‘Bailout’ fiasco being discussed in Washingtoon DC: Here goes …
I think the last time we spoke, we discussed how it would be a mistake voting for a economic stimulus package while ignoring the escalating foreclosure issue and the deteriorating economy; hate to say I told you so…
Back to the crisis of the day, after looking over the first draft of the Treasury’s ‘Rescue Plan’ and the follow up ‘compromise’ plans, I’d like to tell you what a bad idea they both are.
There seems to be some notion that if we (the taxpayers) take these bad debts off the hands of the Wall Street investors, somehow the clock will be turned back to 2004 and banks will start passing out easy money loans and the economy will start ticking again.
There’s an old saying: once bitten twice shy. These banks / investors have gotten burned putting out easy money mortgages, car loans, credit cards extensions, business loans and are likely to be more cautious before giving out more loans. Bailout or not, banks are going into a conservative phase and won’t come out again until they remember that’s their business and they can’t make money any other way.
At this point, Wall Street has tangled itself in so much investing complexity, they only way they will survive is by untangling their mess one string at a time.
If Congress decides they’re going to invest Taxpayer money (in the form of bonds you borrow from other countries) please keep this in mind: who will benefit from the cheap money? Is it Wall Street investors who still won’t lend out money for homeowners and business owners who could keep their homes and businesses if they had access to loans at good term (assuming they COULD pay them back).
Don’t make public policy based on what benefits the stock market, do what is best for the American public and when they prosper, the stock market will follow.
Good luck in the next few days.
I am glad to see that someone else is being as active as I am trying to be. Thank you and keep up the good work.