Emotions shouldn't cloud decision on the bailout plan!


Wall Street protesters New York Times Chief Financial Correspondent and Columnist Floyd Norris, appearing on the "Charlie Rose" talk show Monday night on PBS, offered an insight that sort of summed up the financial crisis, the need for a rescue bill, and the reason a considerable portion of the American public doesn't like the rescue package.

Floyd Norris said: "At times it does appear that Wall Street is saying 'Bail us out or the U.S. economy is ruined.' And, if you're a citizen of the U.S., it's perfectly normal to be upset and angered by that. The problem is, what Wall Street is saying is true."

No time for perfection

The rescue bill, even the expected, revised rescue bill by Congress, will not be perfect. And yes, it will help some on Wall Street, including (unfairly) those who 'gamed' the system, or whose business mistakes, dubious securitization frameworks, or just plain greed helped create the crisis in the first place. But the nation does not have the luxury of taking six months to compose and pass a 'perfect' bill. The nation needs a rescue package, imperfect though it may be, to stabilize the financial system. And it needs it now.

Should you, the typical investor be upset about that? Sure, it's o.k. and it's a natural response to be upset, but don't let that emotion lead you to believe the nation or the financial system would be better off without a rescue bill; it won't be. And it's not possible to prevent Wall Street institutions from being involved in the solution -- at this time-pressured, critical juncture, they have to be. As The Times' Floyd Norris noted, Wall Street knows it, we know it, everyone knows it. So accept it, and move forward with the necessary work of getting a rescue plan in place.


Later, after the rescue package is taking effect and the credit markets have stabilized, the nation can examine the role Wall Street plays in the U.S. economy, and if preferred, decrease Wall Street's influence.

Again, as Norris noted, at this juncture it is impossible to stiff Wall Street and expect the U.S. economy to recover. Nor is it likely that the consequences of not acting will hurt only those who made financial mistakes.

Some may argue, 'The economy can function without credit. It did before.' Yes, a barter economy can function without credit, and the U.S. economy did fairly well before the increase in universal credit prior to 1920. But it's very hard for a capitalist economy to exist without credit. Capitalism, by its very nature, requires expansion to generate increased revenue, higher profits, and more jobs. Capitalism must grow to survive. Eliminate credit and you prevent capitalism from growing.

And the view from here is that preventing capitalism from growing is not something the American people want.

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