Failure could be an option
Quoth Steven Pearlstein in the Washington Post:
You’re angry. I’m angry. House Republicans are angry. We’re all angry at having to put up huge amounts of cash to rescue a financial system because a lot of very rich people rolled the dice with other people’s money and lost.
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Several years ago, I worked in an investment house. I studied for the Series 7 and would have earned a Series 7 license if I had not decided that my destiny was elsewhere. So as I watch current events unfold, I have the viewpoint of someone who understands what’s going on.
Washington Mutual (my bank, or one of them, at least) has failed and been sold to JP Morgan. Congress is holding hearings, politicians are becoming entrenched in unshakable positions and slowly, the wheels of the American economy are coming to a halt. Indeed, with strong public anger over the proposed $700,000,000,000 bailout of Wall Street, it seems like a real possibility now that no bill may pass through the congress in time.
There are a lot of principled people who believe that the bailout is a sham. They’re right, it is. There are others who believe that the bailout is essential to the economic health of the country. They’re right, too.
There is no magic deadline. Things could go bad today, or they could go bad next week, but rest assured that things will indeed go bad if major institutions decided they won’t risk their liquidity in an unsteady market. That means no loans, which means that businesses and banks will fail. The resulting crisis will be nothing short of catastrophic.
For those who refuse to agree in principal that a bailout must occur (and soon), I ask that you remember this view twelve months from now.
