Miller: What’s up with a $700 billion bailout?
In addition to the Dr. Evil-like “700 BILLION DOLLARS” intonation, the catch phrase this week cited in the media ad nauseam has been “Wall Street to Main Street.” By this we are to understand that some of the generally opaque mechanisms of high finance may actually affect us poor schlubs working for a living. Here we were, trusting the “free market” to manage all our investments, insurance, retirement accounts, home mortgages and the like when, as it turns out, those folks in suits either didn’t know quite what they were doing or were, ahem, lying and cheating.
Most of us don’t have the slightest idea what the hell is going on. We know it’s bad, though, and we have some comprehension that 700 BILLION DOLLARS is a lot of money ” as was the $85 billion already spent to bail out AIG. On some level, we probably also understand that if something like a trillion dollars of taxpayer money is handed over to troubled Wall Street firms, that’s a trillion bucks that won’t be going into things like, say, road and infrastructure repair, investment in sustainable energy, health care programs or even bridges to nowhere (and ah, how innocent that $400 million bridge now sounds!).
Blame flies thick and fast these days, with politicians on both sides of the aisle frantically looking for scapegoats outside their own ranks. Democrats love to blame anti-regulatory practices dating back to the Reagan area, while Republicans are happy to point out Democratic lawmakers and presidents who had a hand in it as well. At this point, though, the question of how it happens seems as irrelevant as whether Iraq had WMDs: There’s still a mess that needs to be cleared up, and apparently it won’t wait for whoever is going to be the next president.
It’s been interesting to watch the sudden front-and-center roles of Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. They say scary things about what’ll happen if we don’t fork over the money and get peppered by Congress in a way that strongly suggests the money will be forthcoming as soon as every lawmaker gets a chance to bitch about the tab. Meanwhile, still-President Bush holds weird, awkward press conferences that strongly suggest he knows as much about the cause and solution of the whole mess as he does about the Muslim world he so effectively stirred up.
Yes indeed, this is one Wall Street problem likely to have serious repercussions on Main Street. For a place like Summit County, which relies on discretionary income and plenty of Wall Street cash to purchase our multi-million-dollar log mansions, we may well feel the shockwaves this winter. It’s hard to justify a $10,000 ski vacation when your portfolio is tanking, or to invest in that vacation home when you’re having trouble making the payments on the place in Westchester.
As they wrestle with what to do on Capitol Hill, we Main Streeters need only look at our seesawing 401(k) balances to recognize that this isn’t some abstraction for the cable news talking head to yammer on about. It’s real, it’s here, and it’s probably as much our fault as anyone else’s. After all, we bought up the too-good-to-be-true mortgages, did we not? We elected representatives in government and stood by as they deregulated left and right. There’s plenty of blame to go around, but comprehension about what all this actually means and a clear idea of how to fix it all? Not so easy to find.
It’s easy to understand why world leaders throughout history have chosen going to war when things get too complicated at home. People understand stuff like “supporting the troops” and quashing an external foe more readily than they do things like “derivatives” and “mortgage-backed securities.”
Perhaps even an unprovoked, illegal war in some far-away country would be balm to our souls in these troubled times.
Editor Alex Miller can be reached at email@example.com or 970-668-4618.
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