Before You Bail on the Bailout

Recent chats with experts, including my brother Paul, who knows more about economics than you do--okay, more than I do-- have given me a glimpse of what we’re in for, if we don’t do something immediately about our nation’s plummeting credit confidence.

I’ll share with you a few things that I now understand:

Lifestyle

What’s going on in your day-to-day life? Do you use credit cards? Are you paying off a mortgage? A car loan? Have you borrowed against the equity of your home for any reason? Are you, or is anyone in your family planning on going to college?

Do you have an IRA, a 401K, a pension fund, money market accounts?

Does your city or your state issue bonds to fund roads, schools, colleges, firefighters, police, or other municipal or state costs?

Do your favorite stores order constantly restore their shelves, make improvements, rent their facilities? Do you, or your friends, relatives or neighbors work at businesses that work this way?

All of these fundamental parts of our lives work through a flow of credit. Without that flow of credit, each of these parts start to weaken, wobble, or even collapse.

Their greed made you money

Did we get in this mess because banks and brokerages, fancy folks in fancy clothes, got too greedy? Yes. Shouldn’t an institution have more tangible assets at hand when they make these loans? Probably. Should these markets operate with a lifeguard watching the pool, in the form of regulation? Sure. Did deregulation by both Democrats and Republicans set these corporations free to take these risks? Absolutely.

That doesn’t change the fact that, over the past ten to twenty years, these greedy #$&*( -ers made us money. The reason your home has increased in value, the reason your IRA gained value, the reason for a lot of our prosperity over the last couple of decades, has been that with easier credit, we’ve all been gaining by hitching our wagons to these less traditional forms of investment, whether directly or indirectly. And those same personal assets will wither if our country’s credit flow doesn’t improve. And quickly.

Angioplasty/ Bypass

It’s now commonplace for a cardiologist to say, “Don’t go home. We need to get rid of this blockage now.”

Yes, we want conditions and safeguards attached to any money the government is sending to relieve this credit crunch. We don’t want to send money that ends up in some CEO’s payoff deal.

Reckless behavior got us into this mess. We don’t want our government to follow it with more reckless behavior.

And yet, we can’t afford to let the patient go home. As the credit crisis deepens, and confidence drops, these problems won’t worsen at a constant speed—they will accelerate very quickly.

Action must be taken right now. Let’s sign the release form for the “surgery” before the patient is flat-lining.