A friend of mine and fan of this blog wrote me and told me she did not feel like the bailout was fair, but could not really tell me why as she did not have enough understanding of how our economy worked to make an informed decision about the bailout. What she DID understand was that she had just lost her job, and was trying hard to find a new one but good paying jobs are scarce now.
Here was my reply to her.
Dear friend,
I think your "personal opinion" is not uncommon. Many Americans do not understand. We are losing our jobs, our health insurance our Homes! Where is the government bailout for us? How can they reward these big corporations that gambled with bad loans and securities and lost? Why can't some of those billions of dollars go to save our, homes, our jobs, our health Insurance.
It doesn't seem fair, and it is not. It is not fair that these corporations were allowed to trade in these unsound securities for so long under an administration that touted "deregulation" and free "market" and tax cuts for the rich. This is capitalism gone amok.
The way our economy works is complicated, but at a very simple level, we "grow" our economy by lending money.
The Federal Reserve loans money to banks, the banks loan money to each other, and then to businesses , you and me etc.
when this Lending stops. the economy stops. No money for the banks, no money for home loans, college loans, and no money for businesses to grow and create jobs.
So something had to be done.
I think the mistake was to think it would work overnight. It has not. The market continues to plunge. The story is not over.
What can we do to see that it does not happen again?
Regulate my friends. Regulate these big corporations, Dump the golden parachutes that basically protect the CEOs from feeling the pain of their companies failures. Make CEOs accountable, regulate corporations to make sure they act as responsibly. And for God's sake, vote Democrat.
