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Bailout Rejected: World Doesn’t End

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We have survived the financial crisis of 2008 without committing ourselves to a higher mountain of debt than we already have. The morning after always brings new clarity to any situation and this one is no different. We have passed the crisis point and the stock market is recovering.

If we look at the panic driven days in the last two weeks compared to the overall national mood today it is as though we have all breathed a collective sigh of relief. Panic is never the time to make rational decisions. Maybe after the panic of Iraqi weapons of mass destruction we are finally learning. If we had not invaded Iraq we would not have been attacked by them because they had no weapons of mass destruction. But once we committed ourselves to that panic driven decision we were stuck with it and are still paying the bill. I don't think we want to do that again with this threatened financial situation which is just conjecture anyway.

I wasn't surprised to see the stock market numbers creeping back up today. Two thirds of yesterday's 700 point drop have already been recouped and the day is just beginning. I was amazed yesterday at the way the situation was covered by the major media. CNN, Fox and even MSNBC had an endless stream of political and financial commentators on who were angrily (literally) blaming the American public for the failure of their desperation driven bailout bill. I won't soon forget that righteous indignation directed at me and millions of people like me by those fortunate few.

Maybe things will be a little tight for a while, maybe they won't. I don't trust the people who got us into this mess to get us out of it. I think that we should send a thank you note to all of the legislators who didn't vote for that insane bailout bill. The bill was rejected by members of both parties which just shows that fiscal responsibility and the capacity to think and act in the best interest of the people is not limited by political ideology. Those people need to hear that the people of this country support them in their stand in the face of incredible pressure.

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About Mike Johnston

  • Baritone,

    “Welcome to Wal-Mart.”

    Forget that job at Wal-mart. When the money burns, there will be a run at Wal-mart, then a run on the suppliers to Wal-mart, and then finally, if there are any left, a run on guns and bullets. Go contact the farrier on the list and see if he is willing to train an old fart like you in the fine art of nailing shoes into horses’ feet. I suspect a lot of folks will be willing to assist him in the not to distant future.

    There still may be real estate appraisals – but expect to be paid in something other than specie.

    If I were you, I would be grateful that I got to see my son in Germany. It may be a while before you get to do it again….

    Go join a choir and sing your heart out. G-d even hears agnostics, Baritone.

  • Time for change, indeed! Obama represents the ONLY meaningful change possible. McCain is part and parcel of the old guard. His status as a “maverick” is in his own mind, not in the reality of his Senate voting record. He is a short tempered, condescending old fart with nothing new to offer.


  • Most of the big credit and banking outfits are carpetbaggers.

    And we have Joe Biden as one of the principals to thank for that! Wake up and smell the burning dollar bills, folks. It’s time for change.

  • I am anxious for some resolution. I don’t like the idea of the bailout (or rescue, if you prefer,) but doing nothing could be far worse. I wouldn’t say that we have made it through the crisis. There has just been a brief respite. If the redesigned bill also flames out, it’s difficult to say what the response will be.

    For me, I don’t need credit for business, or even for personal use except occasionally. However, the current “freeze” on credit is certainly having its effect on my business.

    The greatest proportion of real estate sales taking place now are the selling out of repos – requiring in most cases cold, hard cash. Very few mortgage loans for purchases or any other reason are currently being made, at least that’s the case here in Indy. Consequently, I’m doing nothing. The lenders have even stopped having their repos appraised. There are just too many of them.

    Few people have the stomach for getting into the mortgage market, and even if they did, it’s doubtful that they could get it done.

    Sales of existing homes in Indy are down more than 16% from last year, and last year they were already down around 18% from the previous year. New home starts are almost at a standstill.

    I personally need this rescue bill to be resolved, and preferably approved in some fashion in the hope that credit will loosen up promoting some discernable movement in the housing market here in and around Indy. I suppose that’s selfish and short-sighted, but so be it. My coffers are getting very low. Something’s got to give, or I had better start rehearsing for my next job.

    “Welcome to Wal Mart.”


  • mike

    As a recognised idiot when it comes to money and business (just ask my wife), I find this all fascinating – I hope not like watching a chain reaction multi-car pileup, but more like turning on the lights in a roach-infested room – the slow ones get stomped, the fast ones scurry, but ya’ll know they’re there. The exterminatior shows up in November to vote the Bastards out, and the crooks go to jail – not a Stalinist show trial, but a real trial.
    I think it’s bank to bank credit,interest rates, and loaning ability to each other (roaches breeding under the sink) is the real issue, and the cascade from that is the pain we’ll feel.
    I can’t buy goods to sell you for the upcoming week, because there’s no money to borrow (in theory) or the interest is a bazillion percent for a 30 day loan. I don’t have the reserve capital (keeping my overhad low), so I’m stuck.
    I lay off 2 employees – can’t pay ’em, who now are out of work, not spending, etc, etc.
    Side bar – Saw an interesting thing on line – Say I have 50,000.00 in cash. I have banks ‘bid’ for my cash for a 6 month CD in their institution. I start at the rate I can get locally, and see who bids higher. The online example seen was 3.15%, got 4.08%.
    How many of us are now willing to get in the banking business, instead of selling fake money/assets?

  • bliffle

    The existing credit institutions are unreliable sources, anyhow.

    Startup companies in the 70s, 80s and 90s didn’t get their capital from BofA, or any of the other bankers. They got their money from their own savings, from friends, employees, angels, venture capitalists, etc.

    Apple, Microsoft, Yahoo, Google, etc., weren’t financed by Lehman, etc.

    Financing schemes were improvised to suit the circumstances. Investors and builders worked together to make suitable financial arrangements. Companies didn’t go to an ATM for their loan.

    Most of the big credit and banking outfits are carpetbaggers. They came in late and were attracted by a chance to make easy money without much risk. After the pioneers had blazed the trail.

    They were not and are not necessary.

  • troll

    Joanne – credit is simply ‘capital looking for an investment’ and is basic to our present organization of funding economic activity…there wasn’t a ‘before credit’ under capitalism

    remember what ‘capital’ you invested in building your business…other more capital intensive businesses need more investment than individuals can muster without ‘banking’ their capital with each other

    but you know this

  • I don’t like seeing businesses go under, and I don’t like seeing my 401K go down to less than what I invested in it, but I do understand the natural ebb and flow of the stock market. If you play the game, that’s the breaks.

    In our small business, we’re lucky. We haven’t had to use our credit, so we have no debt.

    I think this is how people did it in the olden days – before credit.

  • troll

    correct Lisa – watch the interest rates on bank to bank loans for an indication of how ‘frozen’ credit is

  • Lisa Solod Warren

    Hmmmm. Don’t be so sure. According to experts, it isn’t just the market…. it’s the tightening of credit. If institutions won’t lend, and they won’t, then small businesses can’t stay in business, bigger businesses can’t grow and hire, and no one can expand. A lousy prospect for jobs, and that is what hurts the middle class, ie., average Americans, which is much worse than stocks rising and falling.

  • Jonathan Scanlan

    I’d be interested to know if the recoup has something to do with renewed expectation of the bailout.

    Let’s not relax just yet.