The Bailout. What was it for? If you said Wall Street, that’s probably because you’re not paying attention, and neither is MSNBC, apparently.
The bailout is not for Wall Street. It’s for banks and the financial sector which, while far from being divorced from the goings on in Wall Street firms, are not really the same thing at all. The bailout was meant to buy up currently defaulted upon debt that is seizing up credit markets. Banks over-invested in funds made up of mortgage debt holdings and now that the mortgage market is hemorrhaging with defaults and foreclosures, those funds are rapidly losing value and cannot be sold. That means there’s no capital left to invest in new loans, nor are the banks willing to trust that anything can get repaid right now. In short, seizure.
There’s absolutely nothing about the bailout which was supposed to or designed to stop Wall Street panics or fluctuations. Nothing, nada, zilch, diddly shit.
Now, it is true that without credit, there are many businesses – particularly smallish businesses – who will be hard-pressed to pay their workers. But what does that have to do with Wall Street? Nothin’.
It’s true that without a fluid credit market, buying a car or a home may be impossible. Cars are still being sold right now, however. So, what does a potential problem a month down the line have to do with a plummet in stock values now? Nothin’.
Hey, come to think of it, what did Hurricane Katrina have to do with gas prices getting jacked up a dollar a gallon in the hours that followed the breaking of the levees? What did our sabre rattling with Iran have to do with constant hikes in gas prices? What did one set of pipelines in Georgia have to do with raising prices? Nothin’, nothin’, nothin’.
There’s nothing going on down on Wall Street that isn’t wild, uncontrolled speculation. The banks are there to be a force for stabilization in our markets, but guess what? They decided long ago that the most stable of all investments – mortgages – could be sold on the Stock Market as a commodity. Hence they invested money in super funds made up of these mortgages, hence they made enormous sums of money for a while, hence homes became over-valued, over-sold, and under-secured.
So, while we are forced to bail out the banks, let’s not fool the public into believing that bailing out Wall Street was either the plan nor a necessary future goal. Protect the banks and you protect the economy long-term. Bail out Wall Street and you enable the addicts.
