This Financial Mess Is All Ours

[davidbcoe]

I'll start with a caveat:  I don't know anything about economics.  My understanding of the current mess in the financial markets is rudimentary at best.

Okay.  That said, I've been going back and forth all day with a Republican friend of mine about who's to blame for the failure of the bailout/rescue bill and what Obama should have done and what

Comments

[scbutler]

The bill wasn't that bad. It could have been better, but like all bills it had to be a compromise. It was a lot better than Paulson's original bill, and it would never have come close to costing $700BN (even if the assets weren't sold at higher prices over the next two or three years, there was a provision to start recouping any losses from the banks).

Pelosi's speech was idiotic, but it ain't the reason this went down. I found it interesting that the Republican caucus was ready to start the finger wagging first, and had their press conference less than an hour after the vote was over.

[scbutler]

It's all a matter of timing. If we can last long enough to improve the bill, so much the better. The problem is, Wall St works on a different timeline from Congress, and they may not wait for the deal to come if it takes too long. The problem isn's the stock market - it's the credit market. Every week of a credit freeze probably cuts another quarter point off next year's GDP. (Wild, uninformed guess on my part there. But it does cost something).

The stock market can come back like a rocket if it wants to, but no credit will have a much more lasting effect.

[davidbcoe]

Right. The credit market is everything in this crisis. Wall St. is merely an imperfect mirror reflecting far deeper problems.

[davidbcoe]

Yeah, as with JT's comment above, I can't argue. Never thought I'd say this, but I wish I'd gotten that Ph.D. in economics....