In the porkathon to pass the bailout bill, Republicans balked at two measures--to extend jobless benefits for the unemployed and allow bankruptcy judges to reduce penniless homeowners' mortgages.
So much for Main Street, where signs of a 1930s Depression are cropping up everywhere:
*New figures show 760,000 lost jobs this year. Of the 9.5 million Americans out of work, two million have been for more than six months. Nearly 6.1 million people are working part-time because worsening business conditions have led to fewer hours and less pay.
*With bank-account insurance increased from $100,000 to $250,000, the potential liability of the Federal Deposit Insurance Corporation for failing banks is now estimated to be $1.1 trillion. The FDIC's fund currently has about $45 billion, a five-year low.
*The number of Americans on food stamps, growing every month, was 28.6 million in June, according to latest government figures, reaching the level of late 2005, when Katrina and other hurricanes caused widespread suffering.
*Homeless families in Massachusetts motels have increased from 17 to 588 in the past year, with another 1,800 in shelters.
In my Depression childhood, everyone in our neighborhood was poor and many penniless until FDR and the New Deal began to bail us out with relief programs. In the 21st century, the government so far is concentrating on banks, investment houses and hedge funds.
We'll soon find out if the trickle-down theory works.
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4 comments:
This is not a failure of the free market but a direct result of "crack-brained meddling" with it. What we are seeing now are the unintended consequences of feel-good social programs with snappy titles like "affordable housing" and "equal opportunity for home ownership". These attractive slogans are realized in legislation that forces lenders to make loans to people who they normally (under free market pressures) would not because of the risk of default. It has nothing to do with race, ethnicity, or any other type of discrimination. Banks grant loans and set loan terms based on criteria like the borrowers income, debt to asset ratio, credit scores, and ultimately the estimated probability that they will get their money back. It wasn't long ago when people lived BELOW their means in order to save up enough money to have a down payment for a house. Now, you can get a 100% loan from the government for $300,000 even if your debt/income ratio is 60%, and if your skin is the right color...
What has not mentioned is the trillions lost today in the stock market. This bailout was initiated in part that the market will go up. In reality it backfired now there’s nowhere to turn, not Uncle Sam and not the market. I think they should reverse this decision to bailout these corrupt banks, and now we have evidence they are, in spite that is was put into law.
Thank you for the post. Indeed, the signs are bad everywhere and markets are in full panic.
Stocks tanking
Housing market in fire-sale status
Unemployment at five year high and going up
Credit so tight its hard to borrow sugar
A government that seems clueless about what to do
However, I really think the last thing people need to do is panic in their personal lives. Lots of great facts in your post. But I think we should also be talking about what people can do to protect themselves. I gave some advice on this in my column today, which you can find at http://current.pic.tv/2008/10/06/world-markets-panic-you-shouldnt/
We heard every excuse under the sun for why we are in this predicament and there is a hint to the fact of the cause, jobs.
What we need is jobs. We have an opportunity here to get our energy reform back on track. Instead of bailing bank crooks why not invest the money in groundbreaking infrastructure in alterative energy factories. This will cause a domino effect that will open the free market for a huge turnaround in our dependency on foreign oil. I personally am a solar technician and ran a solar company for ten years and can’t find a job. I have written Mr. Pickens numerous times on an elaborate plan and how I could be a part of facilitating it, not even a response. So there are many out there who talk with no action.
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