The bailout blues

I had mixed emotions when I learned the Senate had passed its version of the $700 billion economic bailout bill.

On one hand, I felt intense relief. Finally, there is some action being taken to stabilize our economy in the face of this economic crisis. Regardless of the details of this legislation, the message that something is being done will do its own part in shoring up market instabilities on Wall Street and in financial markets around the globe.

I watched with horror earlier this week as the breaking news of the Houseís rejection of the initial bailout plan sent those markets tumbling. More than a trillion dollars lost in mere minutes. I personally canít even comprehend that many zeros. Even a billion, which is bandied around like small potatoes these days, is difficult to conceptualize.

That is one of the reasons that I also have my doubts about this multi-billion dollar bit of legislation. While I know that something needs to be done, I donít know if this is the way. But I donít have any better ideas.

It is easy to feel insulated here in Chenango County, despite the fact that weíre not even 200 miles away from Wall Street. While it is only the giants being affected, our own sense of insignificance gives us a false sense of security. But never fear, it will trickle down. Or rather, stop trickling, as the credit crunch starts to limit things we take for granted like being able to get that loan for a new car, or using a credit card to make a purchase.

Itís not just the financial markets that have lost confidence in the midst of all this chaos. Iíve lost confidence, too.

When weíre young, we tend to think our parents and teachers are infallible. As we get older, we realize that they are only human. But do we necessarily revise our opinion of those people we consider experts in their fields? Like those financial advisors and mortgage specialists that sold all those adjustable rate mortgages. You know, those toxic loans that have been the downfall of all of these stalwart icons of the banking and investment industry.

Iíve lost count of the number of times I have heard people blaming foreclosure rates on the families that secured these loans to purchase homes. They should have known better than to take out a mortgage they couldnít afford, these critics say. But do they honestly believe that these families signed on the dotted line with a clear understanding that the terms of those loans meant their monthly payments would skyrocket and they would lose their new home? I doubt it.

Even if they did read the fine print (which Iím pretty sure is done only by lawyers and my father), they would have needed someone to sit down with a calculator to show them what would really happen when interest rates rose.

Those advisors, mortgage brokers and financial institutions are the ones that should have known better. They knew these loans were high risk. But greed apparently got in the way of logic and ethics.

And now itís a moot point, really. The mess has been made and it has to be cleaned up. If something isnít done, our entire economy will be twirling counterclockwise down the drain with all of that bad debt.

Now, I donít have a lot of investments and, despite having a nun in the family, Iím not very religious. But that doesnít mean that I wonít be watching the markets today, praying that this bailout plan was the right move.

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