The consequences of doing nothing as America's financial markets collapse were immediately clear Monday.
In the hours after the House rejected a hastily drafted $700 billion bailout of Wall Street, the Dow Jones Industrial Average plunged. It ended nearly 800 points lower, the biggest point drop ever, further undermining the already diminished retirement savings of millions of Americans.
Legislators who voted against the plan - including all four from South Hampton Roads - blamed leaders for failing to listen to concerns about using taxpayers' money to reward greedy financiers for their missteps.
That misses the point.
The intervention was wildly unpopular, true. But by voting against such necessary - albeit painful - legislation, 228 members of Congress elevated principle over people.
Over the weekend, even as leaders from both parties rewrote the Emergency Economic Stabilization Act of 2008, the trickle-down effect of the financial crisis became apparent.
Wachovia Corp., which holds the largest share of Hampton Roads' bank deposits, narrowly avoided collapse by selling its operations. Automakers announced that September sales dropped 11 percent over last year. One of the nation's largest homebuilders reported losses four times worse than a year ago.
For people who bank, work, shop and eat on the oft-cited Main Street, or Granby Street, Virginia Beach or Battlefield boulevards, Wall Street's crisis translates to no loans to help buy a house or car or go to college. Inaction threatens businesses that use lines of credit to meet payroll and expenses or to keep the assembly lines rolling.
The impending loss of jobs hit home Saturday. "The chairman of the Federal Reserve has told us if the credit lockup continues," Sen. Kent Conrad, a North Dakota Democrat, said, "three million to four million Americans will lose their jobs in the next six months."
To put that in perspective, in the past year, the number of unemployed has increased by 2.2 million. So when lawmakers voted against the bailout, were they saying that putting millions more out of work is an acceptable price?
The bailout, if successful, would slow losses and consolidation in the banking system while the next president and Congress figure out how to return the financial industry to health.
The bill that failed Monday was at least a place to start. There was reason to worry about the extraordinary powers the bill gave the Treasury secretary to spend money, as well as the move toward nationalizing the mortgage industry.
But the bill required an oversight panel, audits by the comptroller general and the appointment of an inspector general. Unlike the original version, the legislation provided some cover to taxpayers.
Anyone who believes the bill would have fixed the economy is naive. But before America can fix the economy, before it can change the regulatory structure that allowed this financial meltdown, lawmakers must save the system from collapse.
On Monday, Congress did nothing except to destroy confidence in the American financial and political systems. It's a wonder the markets - here and overseas - didn't drop more.
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Hmmmm
So they voted the way the people they are supposedly representing and that is a bad thing? Instead they should vote against the people, not get re-elected, get someone who will work for the people elected and then what? We have what you want, a socialist economy where the government will do everything for you, slowly eroding away your freedom slowly but surely. I personally do not want my taxes going to pay for peoples bad decisions, bailing out house flippers and deadbeats that have no right borrowing money above their means. It's time to pay the piper, and the government needs to let the market self correct or the crying liberals will always come back to them for a handout/bailout when the risk comes back to bite them. The market goes up, the market goes down, accept the risk with the rewards and stop whining!
Failure to Act
This was/is a good case for doing something--even if it wasn’t perfect, rather than doing nothing at all. It was also a case of many spineless representatives who followed their mail rather than their brains. To the average person this bailout sounds like a terrible action so they deluged their reps with negative feedback. The problem is that the average public does not really understand that NOT passing this will cripple the entire country because of the lack of lending that is necessary for such things as companies being able to make payroll or to even stay in business. The reps knew this and STILL voted against it. What cowards--more interested in how it will play back home than what they knew had to be done. Every single Virginia representative—SAD!
Tough Decision
It is difficult enough to truly understand the convoluted machinations of the mortgage market, let alone to have a firm opinion about the solution to the mess. But look: Wachovia tumbled for playing dirty, while other banks are still standing. In a democracy the constitutncy can cast a vote of "no confidence" without really understanding the schematics of the problem. Yesterday, we learned that democracy is still alive. Thank God for that. The stock market fell but rebounded today. The Feds are injecting liquidity back into the lending market. The referrees blew the whistle on a badly flawed bill. Life will go on and we are all a little wiser now.
You comments like this one?
They are yours:
"Our economy is stable. DUH!"
"You might want to take a good look. This is not a vacation, but I'm not going to give you the answere try and look it up for yourself.
"I wouldn't trust Bush to watch my dog."
"This is what is driving our jobs overseas and destroying our economy.
We can blame Bush for that one."
"The Bush Admin. and the republicans who support him have all but destroyed this county, and it will take decades to get it turned around. McCain is a Bush puppet, he gets no support from me."
Nothing productive said. Just quips and insults. Like I said, if you do not address me directly I will do the same.
when will you learn to read?
"This issue is very complex, requires a great deal of discussion, research and thought before it advances in either direction. What I would like to see is stopping the blame game and try and see what the "real" problem is and what is realistic in solving it, but so many, and on here also, aren't taking a look at the issue, just throwing out comments that don't make a lot of sense and show little knowledge of what's going on."
That is my position on the bailout, and I've posted it several times.
Hey gertz
http://money.cnn.com/2008/09/30/markets/markets_newyork/index.htm?cnn=yes
Check out the link. How do you explain the historic rise in the market later in the day?
You can't. Because you fueled it. It is based on perception. That is why it dropped.
Just don't get mad about the goverment not allowing smoking while you are pleading with them to take over all of the worlds responsibilities. LOL
Lessons from History
It has been historically shown that once a democratic society (like the US) learns that the people can vote to give themselves money (welfare, $700B, etc. etc.) that the decline of that society is inevitable.
I am also loosing some of my retirement as a result of the housing market greedy feeding frenzy during the recent past, but I am also happy the House voted NO.
re:risks
For the most part, an employee's 401, pension and retirement fund are connected to Wall Street, and the individual has no idea how and by what investment company. The individuals that are loosing their 401, pension and retirement funds are at risk, and they didn't have anything to do with the problem.
SO...
Lessee, 95 Democrats including 12 of which were on the committee drafting and vetting the bill agreed this bill was a bad idea. The market dropped 777 points but after 15 minutes this morning the market has climed 180 points and is still rising. This bill failing means peoples available credit will drop, which means their credit scores will drop, which mean people will no longer be able to live on borrowed money, they will have to learn to conserve and save and not rely on the government to bail them out. They have yet to change the bankruptcy laws...
dokein-
You are spot on. There are serious issues in the bill.
I read it and determined that it bails out institutions..it does not address, correct, or do anything about what got us to this point.
We got here over the past decades by laws, regulatory policies and subsequent changes that suffered from the "LAW OF UNINTENDED CONSEQUENCES".
It mostly comes down to credit. It's been too easy to get. It's been abused. It's fairly easy to get out of and pay pennies on the dollar.
You can blame partisan
You can blame partisan politics, but that only goes so far. It doesn't explain why Bobby Scott, unopposed 7-term incumbent in Virginia's most Democratic congressional district, decided to finally show his backbone and break with the Democratic Party on *this* of all issues. If they can't sell a member of their own party who has nothing to lose on this idea, there's gotta be something seriously wrong with it.
Risks
There are risks associated with the market, Gertz.
I lost a grunch myself.
the 800 point drop equals
over $1 Trillion dollars in stock value, which many people have retirement funds in.
Business as Usual
Our esteemed politicians put their own Political Ambition ahead of showing any true leadership. Part of their responsibility is to make unpopular decisions that are in the publics best interest. And so it goes.