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As I'm sure folks know by now, the US House of Representatives has defeated the bailout bill.

What follows is my own personal opinion. Disclaimers are put forth - I am not an economist, a financial investor, or particularly savvy in us world markets. I have, however, spent a lot of time reading, listening to level-headed reporting and commentary.

I think we're in deep doodoo.

My opinion is that the US lawmakers just took the side of localized petty politics, instead of doing what is right for the nation. And we're not talking about this whole "main street vs wall street" BS that's been bandied about. To me that's a distraction away from the real issues.

Most people don't understand how the larger financial markets work. They think 'credit' is a bank loan to buy a car. It isn't. The global credit market is about the hundreds of billions of dollars that are exchanged every night in short term credit between banks and businesses. This is about a production plant in Wisconsin that normally needs $1,000,000 a day to operate. The night before, the bookmakers say "We're short $100k. We need a loan". They call up their broker, say "Gimme $1,000,000, I'll pay you back on Thursday". They get the loan, the plant functions another day, they bring in $1.1million on Thursday, and pay off the loan. Done.

That is how industrial and business credit works. It is the lifeblood of our economy.

If that loan can't happen, that plant either operates at a loss, or they shut down for the day. That daily shutdown means instead of making $900,000 that day, they make zero.

Which is worse?

This credit cycle is what this bill is... er... was... designed to protect. It was to keep the markets alive and ease the credit tensions so the banks wouldn't continue jacking up the interest rates on those short-term loans, thereby making it very difficult for a business to make money on a day to day basis. There's already stress on this market, already 'credit freezes' going on. Businesses unable to get the short term loans necessary to function. Now it'll just get worse.

Unfortunately, the politicians and the general US population doesn't understand this. They just see fat cat Wall street folks getting zillion dollar paychecks, and other people getting foreclosed on houses. They vote down what might have been the only thing that could have kept the banks in business, and the credit flowing.

IMHO, we are now in serious danger of a depression. And frankly, I'm scared.

Thank you Washington. You may have killed us all.

Cloned from: Planet Geek!
Category: Politics.
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