I feel like I have to write about the bailout. I’m not even sure of my thoughts and I’m assuming they will become more concrete as I write this. First of all, both John McCain and Barack Obama pushed for the bailout, I suppose with the thought that they would like to minimize the magnitude of the impending crisis that those of us on “Main Street” are about to feel – probably for at least the next 2-3 years. It was no surprise to me that Henry Paulson, George Bush, Dick Cheney, and those in their administration would panic at the thought that the entire economic fabric was unwinding. It has been clear to me that Bush has spent the last couple of years trying to manage his place in history. His “surge” strategy in Iraq – which I will focus a complete post in the near future on, once I complete reading Bob Woodward’s “The War Within,” an interesting inside view of the process leading to the decision to “surge” in Iraq – was clearly a huge gamble trying to protect his image from being a president who “lost” a war, especially a war of choice that de-stabalized the entire world. Now he’s being mentioned in the same breath as Herbert Hoover and the republican blame machine is trying its best to guide history toward the “real culprits” of this disaster. It was also no surprise to me that the Bush administration used the “fear card” to get this bailout through Congress. This tactic worked on Iraq (several times), it worked on torture, habeas corpus, FISA, and the Patriot Act.

What was surprising to me was the willingness for Obama to join the “bandwagon.” I fully realize why he did it. He can’t be the president if he doesn’t get most of the votes on election day. The fact that he and McCain both supported the bailout took the risk out of the situation for each of them. Obama’s lead in the polls was “swelling” at that point and he understood the weakness John McCain was facing due to the ill advised comments he made about the “strength” of our economy only hours before the meltdown kicked into high gear. This was the safe move for Obama, he attempted to get some “populist” language into the bill and attempted, but failed, to get relief for the homeowners who are finding themselves “upside down” in their mortgages and facing bankruptcy and foreclosure.

It was equally surprising to me for McCain to just go along with whatever transpired. Published reports indicated that he was pretty much a non-factor in all the meetings that preceeded the final bill that was enacted – despite his proclamation that he was “suspending” his campaign to go to Washington to lead the republicans in devising a plan. When you think of the size of the gamble McCain took in selecting Sarah Palin as his VP running mate – with at least an awareness of some of the baggage she was carrying – it’s hard for me to understand why the “maverick” went along with this bailout proposal. I firmly believe had he opposed the bailout, the polls would have instantaneously swung back toward his campaign, and while it probably wouldn’t have been enough to put him over the top, it certainly would have closed the gap to the point that this election would be a close one. These next 19 days would be much more critical as the effects of the bailout take hold, and I certainly think the Bush administration would have had at least some temptation to manipulate the results with at least an attempt to stall any positive results until after the election. Despite George Bush’s focus on his “legacy” he has a significant self-interest in McCain winning. The possibility of investigations of numerous potential crimes looms much more prominent with an Obama presidency (in fact my lobbying effort will commence upon the conclusion of an Obama victory on November 4th).

Back to the bailout. So no matter who wins in November, the next president has a certain amount of culpibility in the proposal that is now unfolding. I realize that the bill will be significantly changed if Obama wins, especially if it’s a landslide victory and he brings  a democratic majority into the senate of at least 58 seats, which is a real possibility. But this idea of Wall Street (Paulson, Bush, et al) bailing out Wall Street just isn’t sitting well with me. Every economic expert that I’m reading, have read, and probably will read have said this economic crisis won’t end until the housing crisis is stabalized and housing prices start to rise again. They all say that sooner is better than later. The damage being caused by the one asset of significance for most working Americans spiraling downward is beginning to mushroom. It still doesn’t feel to me like the politicians “get it.” This is probably because they are so insulated from the realities of every day Americans. And of course I can just imagine those Wall Streeters that are getting this government aid licking their chops at the thought of cleaning up the mess by purchasing the homes of the distressed “Joe Sixpacks” as Sarah Palin put it. I heard one “pundit” pointing out that many of the people who are still working on Wall Street are experiencing huge drops in their income – like as much as from two million per year to one million per year. He actually said that they will just have to figure out how to “make it.” After reading that I presumed that I just have no idea what it costs to live the lifestyle they live, but my thought was hey, tough it out!

As I ponder this situation my thoughts keep coming back to the place that if the real problem is in the falling housing prices, the 700 billion would have been better spent bailing out the homeowners who are losing their homes. Based on the so-called economic stimulus package of last spring which was one of the earlier “band-aids” used by the Bush administration in trying to postpone the inevitable with the economy, 700 Billion dollars would amount to almost $4000 for each working American. I know I could have used a bailout like that. And I wonder, “Where does this money come from?” Certainly no investor in his right mind would loan money to the US government at this point in time. I’m presuming the printing presses are working overtime. I believe this leads me to my point. I feel fairly certain that the propping up of these Wall Street banks is just a bigger band-aid (and I was really amazed when I read that Henry Paulson called a meeting of the 9 largest banks – of course including Goldman Sachs with whom he has a significant interest – and essentially forced them to accept the government as preferred stockholders – not letting them leave the room until they had signed a pre-arranged agreement. That is a really major RED FLAG to me. Free market economy???) and this band-aid is not going to stop the hemoraging. Ultimately, I believe Barack Obama is correct when he says the solution to our economic problems will come from the bottom up. I would have felt better if he had demanded that type of approach when this bill was being debated instead of agreeing to this “top down” fiasco.

The sooner those in Washington figure out that the backbone of this country is the people who are at the bottom and not those at the top, the better off we all will be. As I watch the stock market fluctuate wildly every day, I’m more certain than ever that government making policies based on where the stock market is at any particular point in time is a sure recipe for disaster. You don’t solve a crisis created by bad debt, by creating more debt, as least that is the way I see it. Sooner or later the government is going to have to find a way to keep the people who are losing their homes – in their homes. They are going to have to find a way to stop the slide in housing prices. Ultimately, in my opinion, I can see a scenario where this present plan leads the banks to own a bunch of empty houses which they will utlimately sell back or rent to the people who are losing them – selling them at reduced prices. Our leaders should be able to find a way to bypass this scenario and save people the expenses of moving twice.

People in distressed mortgages should be able to renegotiate their mortgages in a way that keeps them in their homes and starts funneling money back into the banks from the bottom. Any government intervention should be to buy down the mortgages for the people. And for those people who have managed to stay above the fray, so to speak, make low interest loans available to them so that they could raise capital for things like home improvements or large purchases such as autos, etc. which are coming to a standstill. There could be a 6 month or 1 year “window” when these loans (like maybe 2 or 3% loans) would be available – only for creditworthy homeowners with incomes less than a pre-determined amount. Low interest loans should be available to small businesses who hire workers and tax incentives could be instituted for companies that move their operations back to the US. I’m just throwing out ideas, but my main point is that for any “bailout” to work, I believe it has to start at the bottom! When you think about it, the mortgage crisis started at the bottom, and it became “toxic” as it “trickled up.” So there you have it, my trickle up theory!