The US Economic Bailout Hits Home

Washington DCIn an historic show of bipartisan support, the US Senate last night accomplished what the House of Representatives could not do, and voted in favor of a revised $700 billion bailout package aimed at not only taking failed mortgages off the backs of severely weakened banks, but also in a bid to restore confidence to the markets and get the credit machine rolling again.

Now it remains up to the House, which will vote on the rescue package by Friday. It if goes through, President Bush is expected to sign the Bill into law by the end of the week, and well in time for the opening of world markets Monday morning.

Supporters of the bailout are hoping that improvements to the package, which was favored 74 to 25 by the Senate Wednesday night, will change the minds of some of the nay-sayers in the House that previously thumbed their nose at the package. Many were concerned that it was unfair to put such a massive rescue plan on the backs of the taxpayers, and much of that sentiment was coming from Bush's fellow Republicans.

However, those with their pulse on the financial world predicted disaster if the package was defeated, and that's exactly what happened earlier this week.

For example, even though the rescue package totals more than $700 billion (although apparently it will be rolled out in installments), investors lost twice that amount in a single day when the DOW plummeted upon hearing the news. And Congressmen, who prior to the vote were quoted as saying they had received overwhelming support from their constituents to vote the package down, were suddenly seeing a reversal the next day. One Congressman, who voted against the rescue package, described receiving a phone call from a constituent angry at having lost $30,000 out of his IRA overnight, and pleaded with his elected representative to support the package. "You'd be nuts to do otherwise," he was told.

It also appears that the doomsday messengers had it right. In the days since the rescue package was defeated, some States have expressed concern that they would only be in a position to deliver services until the end of October with resources on hand. Without the ability to fund credit, operations would grind to a halt. Major corporations are in the same bind, reeling from the one-two punch of a sudden drop in consumer spending, coupled with the inability to access credit from banks that have suddenly closed the vaults.

Even consumers who are still gainfully employed and in a good financial position, cannot get approved for funds to replace a vehicle, or buy a home. They qualify, but banks just aren't co-operating.

Thus, the economy is in danger of grinding to a halt and impacting world markets in the process, or taking far too long to naturally recover for the likes of most, many of whom are aging baby boomers with their eye on retirement. Thousands of members of AARP, a national seniors' coalition, sent 110,000 e-mails to Congress in the hours since the bailout was rejected, denouncing the defeat and urging Congressmen to reconsider. AARP head Bill Novelli was quoted in the Washington Post as saying, "people can't afford to wait 10 years for this economy to turn around."

Meanwhile, as the campaigning continues, so goes the blame game. Most assume that the fault lay with the Bush Administration, as it has occurred on its' watch. However there is an entry floating around You Tube that appears to put the blame squarely on the Democrats for pushing, back when the Democrats were in power, for affordable mortgages extended to Americans lacking the traditional financial criteria to qualify. Sub-prime mortgages.

The latter could simply be the latest propaganda ploy in a hotly contested election.

The fact remains, however, that this is a week that will go down in infamy, in the history of a nation.

And it isn't over yet.