The Rant

How 'bout that economy?!?! For all the people who don't think Congress needs to pass this so called "bailout bill" because it would just be helping the people who caused this problem, I have news for you. If they don't pass this bill, our current economy may look heavenly compared to what it could turn into. Sad to say, but true. Our entire financial system could easily come crashing down. A Great Depression scenario is definitely possible if something drastic isn't done. Furthermore, while we (the taxpayers) would be footing the bill (maybe as much as $700 billion!!!), it is very likely that all of the money, if not more, will be recouped.

I don't want to go into intricate details about how this bill will work. The simple version is currently their is a huge credit crunch. Defaults on homes are at historical highs and many banks that got lax in their lending standards are bankrupt or in danger of being bankrupt because they can't get short-term funds to get them through their financial obligations. Banks won't lend money to other banks because of fear that they won't get the money back, and thus banks aren't loaning to regular Joe's either. This extends not just into home loans, but also cars, small businesses, etc. What this bill will do is buy up the questionable loans from many banks. Right now these loans are virtually untradable because no one wants to touch them. However, they have some intrinsic value. The government will go in and buy them at greatly discounted values. This will free up most concerns for the banking system, and it should get money flowing again. When this happens these loans that were bought up will evenutually start to trade again at a "true" value, and the government can sell them off at a profit. There are many other details of the bill that are being debated, but this is the crux of the problem that will be fixed.

Why am I writing about this? Because their are several polls that have shown a majority of Americans do not support this bill. The main reason - Americans don't want to pay for Wall Street and our government's mistakes. They don't think it is their problem. It shouldn't be, but it unfortunately is. If we don't do this, we will pay for it anyway and it will be far less pleasant.