$700 billion just the beginning? FDIC is tanking, too
I can't help but notice the Next Big Story on America's financial meltdown isn't getting much press this morning on the mainstream media, so let me break it to you here:
The FDIC - the iron-clad $100,000-per-person-per-bank insurer that has "never failed" to deliver and has been continually promising during this crisis that your money is safe (read: "please don't run on the bank") - is underfunded. Woefully. To the tune of about $150 billion, and it's going to need a bailout of its own within the next year. Read more here.
The FDIC expects about 100 banks to fail between now and the end of 2009. Is yours among them? Perhaps. But you're not allowed to know. Ignorance is good for you in a democracy, apparently. And especially good when you're trying to avoid a total market meltdown.
No alarm bells though. I didn't even see it listed on Drudge early this morning, so I promptly alerted them to the story and, like a lot of you, waited to see how long it would take to make the headlines there.... Less than 45 minutes. (I'm sure I wasn't the only news hound to tip them off, but you always feel like the one who spread the news when the story finally posts, right? A good deed for the day.)
Let's face it: It's belt-tightening time for America, and no amount of money is going to staunch the bleeding. An informed electorate working with a (finally) concerned Congress might.
With this latest news, though, perhaps you are left wondering (as am I), what is next? Even without a crystal ball, the picture isn't pretty. Foreign banks are already beginning to turn their backs on us. So is spending $700 billion on smoke and air now, so quickly and with so little promise of return on investment, the best course of action - or shall we wait until we see what happens?
I don't know that answer. But I do know we're being bamboozled. We're in it up to our necks. Let's hope our financial system's still got the strength to swim, or that there is a fix that'll grab us by the scruff of our necks and get us to higher ground for now, anyway.
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Comments
Yup! There's nothing we can do, so let's just do nothing. Good plan.
Imagine it is 1929, and Hoover, instead of doing nothing, addresses the populace and says: there IS something we can do. Very unpalatable. Extremely expensive. But if we don't try it, and try it immediately, the results are very clear: We will be plunged into a great depression.
And suppose the public says, Hey, that jerk is not going to bamboozle us! Why, look at all the money that he will need in addition to what he is asking for. (Of course, we don't know whether the amount asked for has taken potential FDIC trouble into consideration, do we? And as the previous post has explained, this particular problem has been taken care of. But it doesn't matter; there will be similar objections.) The point is that time is of the essence, the danger is very, very real, the solution is expensive and I can think of many objections to it, but when I consider the alternative of either doing nothing or not doing something fast enough, it becomes easy to make the decision to act.
Many average Americans don't really understand what it means when credit markets dry up. Indeed, few seem to understand that business is the source of all the wealth in the country, not government programs, which rely upon taxes to be funded.
In a nutshell, business comes to a halt, because business relies upon credit. If you can't meet payroll, or buy new inventory, or expand when you need to, or stave off the creditors, then you go under. YOUR EMPLOYEES ARE LET GO. You can no longer pump all those taxes from business profits and from employee salaries into the government coffers. The employees can't purchase as much as they could before and they go into default on mortages and credit cards. The companies that hold the debt can't survive if it all happens at once. They fold, and all their employees are let go. See above for how this spiral works.
THIS IS ALL HAPPENING RIGHT NOW. CREDIT IS FROZEN TIGHT RIGHT NOW. Not tomorrow. Not maybe. NOW.
This is why Paulson said: If we don't get this bailout right away, God help us All!
As you suspend your campaign to participate in the economic crisis, a subject you admittedly can't handle, I have to assume you are going to bring your very unique experience in unprecedented bail outs - in your case the S&L crisis and the subsequent trial of the Keating 5.
No other candidate or member of congress can claim the level of experience or involvement in such an extraordinary event (as no one can imagine the experience of being a POW in Vietnam).
So, please do tell. Are the proposals on the table to bail out corporate greed and lax oversight similar to your S&L experience? Was the punishment for those involved back then similar to what you want for those involvement this time around? And as someone who is middle aged now and was in school back then, excuse my ignorance, but was the bail out pulled off in a matter of days or was there time to review the proposal? In retrospect did it work?
Your unique claim in your campaign is your vast experience vs. your opponent. Now you have the opportunity to educate the public on government bail outs and curbing corporate and government greed and misconduct. Since you've chosen not to seize on the moment to educate the public on taxpayer bail outs, I can only hope that is because you are riding a white horse to Washington as the only one with the key to "lessons learned".
Yours truly,
A taxpayer about to foot another bill for one of congress' failures - yet hopeful that you won't let that happen again