The bailout: A band-aid, not a cure

Here is a short excerpt from an article that I read recently entitled Seeking Relief from a Massive Migraine:

“The U.S. is afflicted by a massive economic migraine, and more than 200 million Americans know too well just how much it hurts. Their incomes, savings and life-styles are being assailed by a whole group of aches and pains… The stock market has scarcely been so shaky since 1929. Just about everybody who buys, sells, borrows or invests has that overall feeling of unease. And there is no fast, fast relief in sight.”

Sounds familiar, right? I’m sure we’ve all read about a hundred articles like this in recent days and weeks. Here’s another from an article entitled “I Feel a Lot Poorer Today”

“Bernice Garelick, 60, had felt sure that her husband Elias, a dentist, could retire in a few years and spend more time with her. But the crash shook her confidence. The Lindenhurst, N.Y., couple watched helplessly last week as their $300,000 portfolio of stocks sank in value by 20%. Said Bernice: “We have been investing in the market for 22 years. Now this happens, and it threatens what you have worked for over a lifetime.””

These are really great snapshots of our horrible financial situation. The problem is, they’re not from our current financial situation at all. The first article is from a Time Magazine article dated September 09, 1974. The second article is from Time as well, dated November 02, 1987. It took me about 4 minutes of searching to find these scenarios and I found them from a list about 10 pages long.

I know what you’re thinking. “Dave, the economy is cyclical and these things happen. It’s just the nature of the beast.” I agree with this. I just wonder, does it have to be? I’ve been following the god-sent bailout package and I’m not impressed at all by it. It’s a band-aid that’s covering the real problem. We’re combating symptoms of a bad economy instead of looking for the cause of the illness. Clearing out the clogged up credit market and then not doing anything to change the gorging that’s going on in our economy is just going to lead to this all over again and once again cost taxpayers money and purchasing power to fix it. Why are we not trying to fix the problem instead of playing the reactionary game that we keep playing every ten years when the economy goes under?

This bailout is a perfect example of the problem that we face. The federal government wields tremendous influence over the “free” market. A big part of the problem comes from this government meddling. So what’s the answer? More government meddling, of course. If this crisis did not happen a month before the election of about 30 members of the house who voted no to save themselves politically, this bill would have passed and everyone would have hailed it as a savior. Maybe the markets would have gotten better and we’d forget about all this fear. The problem would have never gotten addressed. It keeps happening and we should use this rejection of the bailout bill to slow ourselves down and try to attack the cause of our economic issues instead of just reacting to a crisis by throwing money at it.

The Senate is set to vote tonight on a revision of the House bailout plan that will be basically the same thing but with a few adjustments to get the votes that they think they need. The bill will contain renewable energy tax incentives, relief from the Alternate Minimum Tax, a provision that would require health insurance companies to cover mental illness at parity with physical illness, and an increase in the FDIC insurance on bank accounts from $100,000 to $250,000. In essence, nothing that has anything to do with fixing the economy. It’s just throwing a bunch of stuff in to make people who voted no vote yes because a provision that they like is in there. How many average Americans do you think have over $100,000 in a savings account right now? Raising the insurance payout limit doesn’t help anyone. It’s all smoke an mirrors to make us think that Washington has any idea what they’re doing.

Call your representative in the Senate and tell them to vote NO on the bailout bill and to come up with a REAL solution to our economic problems.