…but as the President speaks and says that “our entire economy is in danger” – unless you pass my $700 billion bailout proposal – the question I ask is – is it really $700 billion or will it (in the end) be more like 3 Trillion?
According to CBS News: Speaking in dire terms, President Bush on Wednesday warned Americans and lawmakers reluctant to pass a historic financial rescue plan that failing to act fast risks wiping out retirement savings, rising foreclosures, lost jobs, closed business and “a long and painful recession.”
Now by no stretch of the imagination am I making light of one of the most serious financial issues of our time, but I keep hearing Forrest Gump in my head saying, “Now I know I’m not a smart man, but…” Well the “but” is when has a government financial projection ever been what they projected it will be – ever?
Bush is right in that we may not only be facing a recession but the possibility of a full fledged depression is not that unlikely.
He spoke just after inviting Democrat Sen. Barack Obama and Republican Sen. John McCain, one of whom will inherit the mess in four months, and key congressional leaders to an extraordinary White House meeting Thursday afternoon to hammer out a compromise.
“Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold,” Mr. Bush said in a prime-time address from the White House East Room that he hoped would help rescue his tough-sell bailout package.
The question remains – is the actions that are proposed too little too late. Every presentation on ethics I make has one central theme – EVERY CHOICE HAS A CONSEQUENCE. We, as a country, relished in the glow of a robust economy balanced on the back of an illusion. We had leadership from both parties and substantial financial institutions who seemed to be more concerned about growing a false economy than taking the measures that all agree today would have made sounder financial sense.
As an example – today I had a conversation with a Realtor (as I am in the housing market as I write this). He suggested that mortgage rates would never be lower and that after the bailout – the housing market pricing would stabilize hence home prices are at their bottom. I must admit (while he may be right – guess there is always that possibility) I had to laugh. Now, I don’t know about the interest rates, but this I believe – housing prices will continue to slide for two very clear reasons:
(1) the number of people who can qualify for a mortgage is shrinking even as we speak. Fewer people are finding increases in their income and many should not have qualified in the first place – hence a smaller population of potential buyers.
(2) an over abundance of inventory. Now I just sold my home in Texas within three days after it was listed for above asking price. For that I am thankful to God and feel blessed. But, as I moved to a different part of our country I found that it is a buyers market. More homes than buyers makes that true. The other part that I have found is builders and Realtors are having a difficult time adjusting their thinking about pricing – they still think it is worth what they thought it was. Yet, I’ve seen homes on the market for now over 600 days with no purchase prospect in sight.
But – the realtor told me that we have to pass this “bailout” otherwise, we will face a disaster. Afterall, he stated, “our economy is built on the ability to borrow against our house. If you need to buy something new or put a kid through college – you use the equity in your home as a second mortgage to pay for it. Otherwise, how else would you get the money?” He made that statement and ask that question with sincerity. What was amazing was – he could not conceive of another way to meet financial obligations.
Perhaps we have forgotten sound financial principles. As a business ethics speaker, I admit I forgot those principles in my past and the price that I paid was significant. We should pray that the bailout works – for the cost of failure will be much higher than most of us would care to dream.
QUESTION: Do you support the “bailout” and why?