The Issue: Volatile markets show instability in the economy What we think: Congressional action needed
In times of crisis it is easy to feel helpless. In the face of war, natural disaster, or depression, the puny powers of the individual are wholly overshadowed by a tidal wave of overwhelming force. It is only in acting collectively that we stand a chance against such forces. To coordinate our response, we elect leaders who we charge with speaking for us to pursue our best interest and to act in times of crisis.
We stand today in the midst of one of these moments. Our financial markets are gyrating wildly, and large financial institutions are foundering in ways we have never seen before.
In an economy that runs on credit, no one is willing to lend cash for anything but the shortest term and yet defaults, foreclosures, and failures continue to rise.
Who can stand up before this crisis, which has been growing for years as housing prices increased and banks loosened lending standards? Who can restore the confidence in the American economy? The answer, of course, is our leaders: Henry Paulson, our elected members of Congress, and, yes, George W. Bush. You and I cannot and will not find the secret panacea for the economy, but if our leaders unite the whole country in action on this problem, we will find the bottom of this turbulent market.
When the private sector fails, we have to look to the government to help provide the answer. It has become ever more obvious that the private sector has failed. Thus, we need a bailout and we need it now.
Are we "throwing good money after bad" and bailing out Wall Street gamblers? To a certain extent, yes. But consider the alternative. Banks continue to fail, stocks continue to tumble, American net worth (especially for the now-retiring baby boomers) continues to shrivel. The financial sector is simply too important to the health of this country to be left purely to the vicissitudes of the market.
That does not mean that lawmakers shouldn't be looking for the best policy. We should be paying mark-to-market prices when purchasing devalued securities. We should be monitoring and cutting the golden parachutes for executives dumping assets on the government. We should be ensuring the taxpayer is getting the fairest deal practicable.
But the quest for perfect policy must be balanced against the need for action now. As long as the bailout plan sits in the halls of Congress, Wall Street, Main Street, and the rest of America are going to be nervous, volatile places.
In crisis, governments must act decisively. We can't have another Katrina, another appeasement, another Herbert Hoover. If Nancy Pelosi and the House Republicans can't make legislation work, we may be swept away by a flood tide of financial ruin.
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