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This is too funny…and so true. I have to disagree with Jon a bit as I don’t feel we should be bailing out all of the homeowners who bought a house they clearly could not afford. There are those who should be helped but some of the more egregious cases are clearly going to have to be allowed to lose. Same with GM and the banks…but this is just too funny.

Way to go Jon!

I’ve stopped paying attention to the stock market these days. Oh, I keep tabs on it frequently but I’ve removed the Windows Vista gadget I used to have in the sidebar that showed me how the market is doing in a “realtime” basis. It’s too depressing. I’ve already done all that I can at this point to shore up my own finances. Back when this plunge was first starting I moved my 401k investments out of stocks and into bonds and money market funds. I’ve moved my wife’s IRA to bonds. Where I can’t do that I’ve left the accounts alone with the hope that when the market rebounds…which it will…I will at least recover my investment (albeit I may be an old man by then) or make good on it in a big way.

What disturbs me is the lack of leadership at the top — both from the White House and from Congress — in addressing this issue. After asking for $700 billion dollars to buy these toxic mortgage backed securities that helped drive this mess, Treasury Secretary Paulson has now decided that doing so is too complicated and would not provide the needed effect of calming the markets and providing some sense of confidence. Instead, he’s investing that money in the banks themselves. Unfortunately, the banks apparently are intent on either sitting on that money (like the American consumer is doing with whatever cash reserves they have) or using it for acquisitions and mergers. That, of course, hasn’t helped at all nor has it resulted in the much needed relaxation in the credit markets. The idea that this money would help cause a “trickle down” effect that would settle the upset American economic market seems to have failed. I, personally, would posit that the Reaganomic idea of “trickle down” has now been clearly shown to be the “Voodoo Economics” that President George H. W. Bush once claimed. Perhaps Secretary Paulson should use the other half of the $700 billion dollars that he’s got in a “trickle up” idea — instead of giving the rest of the bailout money to banks and other financial institutions give every household in the country $100,000 and let them spend it to help jump start the economy. Since “trickle down” doesn’t work…perhaps “trickle up” will.

I read Paul Krugman’s latest op-ed piece in the New York Times and it doesn’t really give me all that much hope. Yet he’s right…we’ve got a complete drift in economic policy due to an administration that is apparently unsure of what to do (or unwilling to do what it needs to do) and a Congress that is biding it’s time…for what I don’t know. What I do know is that the lack of action by the administration (or their claims that they are not sure of what action to take next) as well as the statements made by Congressmembers such as Senator Carl Levin yesterday are going to really drive the American consumer into a bunker mentality that perception will become reality. Consider this statement made by Senator Levin yesterday

We cannot allow the issue of which source of already appropriated funds will be used for the essential purpose of preventing the economy from sliding into a depression, which is a real possibility if one or more of the domestic auto companies goes under, given the impact of the auto industry on millions of jobs, on suppliers that are in most or our states and on all of our communities which have Big 3 auto dealers.

Levin, Carl, “Statement of Senator Carl Levin on Bipartisan Agreement to Support Auto Industry,” November 20, 2008, found at

I’m certainly not claiming that Senator Levin is stating that we are already sliding into a depression but such statements can cause real fear in American consumers and they will respond accordingly — by pulling back even further on whatever spending they are already doing and that will, in turn, contribute to the slide into a depression.

What’s happening now is a mess created by this administration with it’s lack of real economic policy, by a Congress that is, and has been for years, truly partisan, and by a Fed Policy Board Chairman that argued too much for allowing the markets to regulate themselves. But, let’s be honest, it’s also caused by an American consumer that bought on credit as far as they could go and by a system that threw all the basics of lending out the window in the pursuit of short term riches. We have forgotten the very basic concepts of economics — you don’t get something for nothing. And now, many more of us may well lose everything.

April 2020

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