Why You Must Support the Bailout
1640, Update: The Dow lost 778 points, its worst point-drop ever, all due to the bailout vote failure.
The large bailout authorization attempting to get through Congress has failed. While leaders work to get another vote, the stock market has plummeted (down 600 points at one point today). Why did the vote fail? Because constituents of our representatives (that is, you, and me, and everyone we know) are largely against the bailout. Here is why you should support it.
1. The problem affects more than Wall Street investors.
Yes, risk produced this problem. Risky loans, risky bundling, risky investments all lead to the problem. But the losses aren’t contained to big banks and Wall Street investors. Like it or not, you have a lot of money riding on the stock market. Do you have a pension? How about a 401K or an IRA? Do your parents, your grandparents? If yes, turmoil in the stock market means huge losses for peoples’ futures. Do we let bad investments take down the retirement security for millions of Americans?
2. Money must be liquid for business to function.
Unless you are independently wealthy, you need money from other people. Students need loans for tuition. Consumers need loans for cars and houses. Businesses need loans for production. If money can’t change hands, regular life cannot function. Imagine what would happen to the housing market if it took 6 months to get a loan and the approval rate was below 50%. House values would drop precipitously just as they rose when mortgages were easy to come by. If a business cannot get the money it needs to buy supplies to produce a product, it goes bankrupt. Our entire economy is a shark; it must keep moving in order to live. If banks don’t trust each other or businesses, because of bad debt, then the government must buy this bad debt to make our system financially solvent.
3. Further collapse will take down more than just investment banks.
Did you ever think that in your lifetime you would see banks going out of business? Did you ever think you would be depending on that FDIC insurance to save your assets? If the problems continue, you’ll have to worry about a lot more than your bank collapsing. Layoffs will increase. Consumers will stop spending. Jobs will be scarce. Every college graduate will find it nearly impossible to find employment. The collapse may not be affecting many people now, but that could change in mere months, unless the government acts now.
For the future of America, please call your representatives and tell them to vote for the bailout. There is no guarantee that it will work, that’s true. But it’s the best bet we have right now. If we don’t take the gamble, the potential disaster will cost a lot more than just $700 Billion.
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