Monday, September 29, 2008
The world is collapsing
When U.S. markets are so volatile that the Dow can drop 777 points today (the largest point drop ever) when Congress votes down a $700B bailout, I'm wondering how much they would be helped in the long run by passing the bailout. It seems like something is obviously broken, and the government is trying to put a Band-aid on a cancerous tumor.
I've been following the bailout debates for the last week, and am still not sure what to think. On the surface, it seems like a bad deal for taxpayers to bail out Wall Street, and the best argument for it that Congress and the Bush administration can come up with is "I know this deal stinks, but the survival of the economy depends on passing it!".
After today, it's clear that something needs to be done, but I'm not sure what that something is. A part of me was glad that Congressional Republicans opposed it (the Democrats voted 60-40 for it while two thirds of the Republicans opposed it), partly because their party will be blamed for the collapse and partly because this was a bad idea and I'm glad someone opposed it.
On a solipsistic level, this issue doesn't affect me that much. I have a fixed mortgage with one of the banks that failed recently, but it was gobbled up by another bank, so I still have the same mortgage. My 401(k) has lost about 10-15% over the last month, but those are paper losses on income that I've never "seen", except in my quarterly statements. About the only thing that we on Main Street can take is to keep our own personal finances are in order. For us, "no credit" means live within your means, limit your debt as much as possible, and don't risk any more money than you can safely lose on investments.