Time Machine: As Congress and the Bush administration regroups to package a bailout formula to rescue the financial markets, a trickle down malaise will suffocate the life blood of Joe Six Pack and his bosses. Credit. Consider the following analogy. While living in Oregon I experienced the second largest flooding in recorded history of the mighty Rogue River. The middle channel raged turbulently tossing logs like toothpicks and crushing anything that stood in its path. Liken that to the pressures now placed on the stressed out financial markets gasping for air. On higher ground as the river rose the water inched forward lapping menacingly yet tranquilly forging its onward path. Eventually the flood is a foot deep on high ground. First, the home's flooring is inundated with water and later cars are submerged. The destruction continues until the river crests. Liken that to the effect the market's collapse will make its way on Main Street. Most economists agree the credit crunch already crippling the large financial institutions will creep downstream. Credit will remain available for consumers who pay their bills on time but will find it more expensive and extensions less available. High risk consumers will be denied home, auto, school and other personal loans of which they have become enamored with the past 10 years of easy credit. Small and mid-sized businesses will suffer from the credit crunch, especially those who borrow money to meet payroll in order to maintain adequate cash flow. Layoffs could occur, increasing unemployment prospects. Some companies such as McDonald's franchises in the South already have been unable to borrow on credit to stock inventory. Businesses which borrow for the holiday season could be forced to retrench. Up to now, the public suffering from the market crises are those whose home values have decreased as much as 25% in the past two years and investors holding retirement accounts which dropped by a third in the past two weeks.
Gutless Politicians: The 228-208 House vote rejecting the bailout was absent of profiles in courage. Two-thirds of the Democratic caucuses voted in favor and one-third of the Republican conference voted for it. Only five voted aye against their district's constituency's wishes vehemently against the bailout plan. In all other cases, the House members in tight Congressional races in November voted against it. Instead, they looked at the polls: 73% saying the government is on the wrong track, 65% disapproved of Bush's performance, 73% of the job Congress is doing, while 19% have a "lot of confidence" in the government, 11% in corporate America and 10% in the financial industry. The vote reflects a lack of leadership not only of Bush and Republican leaders but also the presidential candidates Barack Obama and John McCain. Obama, who favors the bailout plan as a necessary evil, has remained on the sidelines. McCain tried to muscle bipartisan support but failed. Democrats are not blameless at the top. House Speaker Nancy Pelosi blabbed partisanship in a speech to House members prior to Monday's vote. Bad timing and dumb strategy. Congress is all politics and the blame game after the House vote was pedantic. Republicans demonstrated a startling lack of leadership. Enough Democrats refused to carry Bush's water bucket. Joe Six Pack will suffer the consequences as the financial meltdown festers. Crafting a new bailout plan will be tricky and, worse, time consuming. Almost as bad as doing nothing, the Democrats have enough votes to carry the bailout on their own terms by overloading too many goodies into the system which could comeback and bite them on the butt.