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Government central planners could prevent all this economic suffering if they would just print more money for people to spend and extend more credit for people to spend. There needs to be more credit, less savings, and more spending. This way, house prices would go up forever, and 401K’s would continue to increase in value forever.

I know that a lot of very smart and experienced people believe that the rescue plan is necessary to prevent our economy from going into a tailspin, but I have not seen an articulate explanation of why the theoretical domino effect of bank failures will cause real financial harm to Main Street. If it is simply a credit crunch, can’t the Fed handle that? And if it is just a credit crunch, what is the real effect to Main Street? That people will not be able to spend exorbitant amounts on things that they cannot afford in the first place? It seems that a decrease in available credit — maybe a slower one — is just what the doctor ordered.

What am I missing? (Scott, I suspect you’ve answered this questions tenfold on Marketplace, but I don’t get to listen to you every day.)

Scott, OK, it might be these pre-veep-debate jitters I’m having or the “out of blueberry muffins” sign at the coffee shop on the way to work, but I’m feeling a little less gruntled than usual … so here is my assessment of the sentiment on Main St.

To our legislative, executive and business leaders,

Stop assuming that the American people don’t significantly understand the credit/financial markets/housing/banking crisis. Stop assuming that we don’t also know that whether there’s a bailout package or no bailout package, things could get bad either way. Stop assuming we don’t know and understand the possible consequences. Stop assuming we also don’t know that the most dire predictions may never come to pass, regardless of congressional action or inaction. And I think many Americans would prefer their leaders stop talking to them like they’re children who don’t grasp these “mommy and daddy” problems. In fact I think that’s exacerbating the problem.

Many, many people may perfectly understand, and be willing to take the chance of possible deeper suffering by NOT throwing money toward the people/entities they feel are responsible. I think it’s likely that many Americans are OK with taking a hit if they’re in turn punishing or at least not benefiting the people and entities they deem most at fault. In fact, I think many Americans understand they themselves have some culpability in this whole situation and feel, on some level, it’s the right thing to suffer some. We former Puritans are pretty good at self-flagellation when we think we’re guilty of some transgression. I think many Americans believe feeling some, even significant pain as a result of the resetting of personal and national financial agendas is in order. That also speaks to an underlying confidence, I think most Americans have, that the crisis can be a positive thing in the long run for the economy and the country, even if it hurts for awhile.

I’ve said for many, many years, that I have little sympathy for the pains (taxes, regulation, etc) of millionaires trying to preserve their millions or turn them into more millions. I think a lot of Americans of all stripes and income levels (including Warren Buffet, who has just about begged to be more highly taxed - did you see him on Charlie Rose last night?) agree with that sentiment on some level. Regardless of the source of the ire (envy, egalitarianism, anger or despair) a term like “Fat Cats” is always pejorative and never admiring. And I think many Americans have no problem with the personal cost of seeing Fat Cats taken down some notches. I even think they see a personal and national upside in the long run, mainly in the form of a more cash-based system. If you think Americans don’t feel at the very least some nagging doubt and guilt about the level of credit-based buying they’ve been doing, you are not paying attention.

There’s a saying about lipstick and pigs, which I won’t repeat, but this porker looks pretty bad from any angle. Congress should stop trying to tart it up and simply listen to the people they work for. NOT to save their hides at election time, but because IT’S WHO THEY WORK FOR.

There are many intricacies and individualized aspects to Americans’ very personal, very deep, very bitter anger about this multi-faceted situation, but my observation is that they understand that this was basically an imbalance of power and controls that led to abuses and varying levels of corruption and one-sided benefits and that the people and entities in that system need to be knocked off or kept off the high horse they are or were on that led us to, what ended up being an alkali-poisoned watering hole.

Sincerely, Shawn T. Eldridge

Justin, here’s the main issue: It’s not as much about people buying things they can’t afford as it is businesses being able to borrow just to survive. I agree with you, and in fact I just talked about it on the air this morning, that we’ve created a monster with our credit-driven economy. But the economy just can’t take the hit of too many businesses going down at once. So many companies need financing to meet payroll and perform daily operations.

The Fed has already poured 400 billion-plus into the credit markets to get banks to lend, and the banks are hoarding the money. They just will not lend to each other for fear of losing their money. And when they don’t lend, businesses fail and the economy grinds to a halt. Many, many jobs are at stake.

That’s a brief explanation of the situation as I see it. Over-borrowing got us into this mess, and I have no doubt lending and borrowing will be much more conservative in the years to come - a good thing. But unfortunately, right now, it may be a case of the economy going into complete shock if the credit markets don’t loosen up.

Hope that helps.

Scott, why are you explaining this to Shawn. He said he understand it perfectly. He has already taken this credit freeze into account as has the rest of America according to Shawn. He’s willing to let business roll over on payroll.

Scott Jagow : responding to Jim | Respond
October 2, 2008 2:56 PM PT

Jim, I was responding to the post above Shawn’s, from Justin. He asked a couple of questions. Thanks, Scott