House Defeats Wall Street Bailout Bill

[RDUNC67 1]

There are two things to be concerned with the current crisis:

For those that work in the public sector whether in emegency services/school or city hall, times are about to get tough. Don't be suprised when the vacant positions don't get filled and departments are asked to cut back on budgets as a tax receipts start to drop and state funding begins to dry up. For those that work in the private sector, times will get tough as well. The Wall Street model has forever been changed. Two investment banks have failed, two major banks in the area have failed and Merrill Lynch was acquired. All of this consolidation means that jobs will be lost. NYS estimates that could be 30,000 lost jobs. All of these people spend thier money in the tri-state area. Guys on this board who have B jobs as contractors may see things getting a lot slower over the 12 months. DPW guys who do landscaping on the side may see accounts start to drop. Delis will get slower as people brown bag more. Restaurants will see less demand as people stay home. This is not meant to be a scare tactic but merely to show the ripple effects that are likely to happen. As people cut back spending, the economy stalls, people lose jobs and sales and income tax receipts fall. This is serious stuff.

The larger picture is not the stock market falling 700 points but the credit market siezing like an engine without any oil. The entire economy is dependant on credit (which is a good thing) to function smoothly and ease any momentary shortfalls in cash flow. Right now banks are not willing to lend to other banks due to fear (see the rise in the LIBOR spreads which cover the loans banks make to each other). The Commercial Paper market which makes short term loans (say 30-90 days) to corporations is virtually dried up. Corporations use this money smooth out ups/downs in their cash flow on a regular basis. Credit also allows companies to buy the raw materials needed to manufacture the goods they make. Credit allows companies to start up or expand their business or get them through a slow period while still keeping employees and factories open. Imagine if overnight, your oil delivery company stopped mailing a bill and expected you or your spouse to pay them $500 cash on the spot or they won't deliver. Credit is the oil in the engine of our economy and right now we are about 4 quarts low. Everybody is arguing over who should put in the oil while the engine is siezing. The only thing that has prevented a complete meltdown has been the Hundreds of Billions in liquidity that the Fed has pumped into the system (something that wasn't done prior to the Depression).

Most of the people on this board are from the Tri-State Area and have more skin in this game than they realize. I am not a Wall Street guy and I don't expect my job to be saved or a fat cat bonus from a bailout (now being called the Rescue Plan). I am realist that things are bad and people need to get educated as to what is really going on. Something needs to be done and that is where the debate starts. I am not here to argue in favor of the plan but in favor of action. The Great Depression was brought by inaction (failure to prevent the bank runs) and bad action such as the Smoot Halley Tariffs which made the problem worse. my two cents which is now 1 due to a bad market.......

That is probably one of the best entries i have ever seen on this site, well written... well done. I think alot of people have the attitude " it won't affect me", this says it all.