Follow the logic here...
Throughout this campaign season Democrats have been claiming that this is the "worst economy since the great depression" for the working and middle class Americans that make up the majority of the populace. Democrats further claim that if we do not pass a $700 billion dollar economic bail out package, Wall Street will collapse resulting in a severe drop in stock prices. Given these two premises I pose the question: Why would a drop in stock prices hurt the struggling "little guy"? If the working and middle class are doing so bad, how would they be able to own significant amounts of stock? Using the Democrat's logic, working and middle class people are in such bad economic shape that they could not possibly afford to own significant caches of stocks. Therefore, again using Democrat logic, a stock market crash would have no impact on working class people!
Ahh, but you counter by saying "A crash on Wall Street would trickle down to Main Street." I heard this line over and over again in the first presidential debate. Wait a minute! According to Democrats there's no such thing as trickle down economics! How can this be?!
Ignoring this incongruity in Democrat economic dogma, let's suppose that a Wall Street failure could indeed trickle down to the working class, and eventually cause mass unemployment. Although highly unlikely (boardering on impossible), let's even go as far to assume that it could cause Great Depression-level unemployment. If that's the case, then why would we not let the free market purge Wall Street through the natural market forces, then set the $700 billion aside for the "little people" in anticipation of the great mass of unemployment and hardship that could follow? Let's assume the $700 billion doesn't make it to Wall Street and an economic meltdown follows. Let's do some math, using approximate numbers and some general assumptions, to see what $700 billion could do:
There are approximately 300 million people in the USA.
Out of those 300 million, about 70 million are children.
About 50 million people are already retired.
That leaves 180 million people.
There are about 14 million non-working spouses (a.k.a. stay-at-home moms/dads)
That leaves 166 million.
Out of that 166 million, let's assume 5% of the people are unemployable in any economy.
That leaves us with about 158 million workers that have the potential to lose their jobs if massive Great Depression-like job losses were to occur.
Jobless rates during the Great Depression reached into the 30% range.
30% of 158 million means that we are looking at a potential pool of 47 million unemployed workers at absolute worst case levels.
Even at those crazy-high, sky-is-falling, end-of-the-world-as-we-know-it rates, $700 billion would be enough to give about $15,000 of benefits to each and every one of these unemployed people.
Now, $15,000 would not be a fortune, but remember it would be $30,000 for 2 income families. With the median annual family income in the US at about $50,000, this $30,000 could possibly keep a family afloat for nearly a year assuming they tightened their belts (which is not an outrageous assumption considering they are out of work). Also, consider that this money would be in addition to any state provided unemployment insurance that currently exists. Needless to say, even in this economic Armageddon situation, the $700 billion would go a long way in getting a family back on their feet.
Being more optimistic, assume that instead of 30% the unemployment level would double to about 12%. It sounds low compared to the 30%, but it would represent a huge economic issue in the US.
12% of 158 million is about 19 million workers.
With 19 million unemployed, the $700 billion could provide a whopping $38,000 in benefits per person. A 2-income family would get $76,000. That's $26,000 more than a median income family would make working for a year! In other words, their share of the $700 billion would be a raise.
That's the numerical look.
So, what's my point? Do I really believe the government should hold $700 billion in anticipation of 30% unemployment levels? Of course not. Do I think the government should lay back and just let the economy collapse? Definitely not. My point is that $700 billion is a lot of money, there are a lot of ways that $700 billion could be used. However, the only option being discussed is a Wall Street bail out.
Our government leaders should use this No-vote as an opportunity to reevaluate their approach. Maybe I'm dreaming, but wouldn't it be nice if the so-called economic experts came up with some innovative alternatives for $700 billion besides a Wall Street bail out? In the end, a Wall Street bail out may still be the best option, but is it too much to ask for our leaders to come up with some alternatives to at least consider?
As much as I believe it makes sense to now consider other alternatives, I my expectations remain low. After all, how can I expect anything other than a Wall Street bail out approach to the current economic slide when the Senate Banking Committee Chairman is in the back-pocket of the Wall Street banks. See the graphic below courtesy of The Hartford Courant showing the top 20 donors to Senator Chris Dodd. Jeez! Money drives behavior. With that list, why would we expect anything different. It's been said that the definition of insanity is to continue to do the same thing and expect different results...
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