Around the world, global leaders are huddling to determine the best steps to get out of the financial crisis. It’s bad. If the Dow doesn’t come back by December 31st, this year will mark its worst yearly slump since 1937. Millions of people are watching their retirement nest eggs disappear. Parents’ savings for their children’s college? Gone.
Over the last week, the market’s continued dive gave a clear vote of no confidence to the bailout plan passed by Congress and signed by President Bush. Luckily, it appears that Treasury Secretary Henry Paulson may have recognized that the plan to give away $750 billion in cash for worthless mortgage-backed securities will not solve the problem. Belatedly, he is now interested in buying equity in major banks — the plan many progressives were pushing from the beginning.
The question is: why did Congressman Frank, Speaker Pelosi, and Senator Reid let such a bad plan through? Large numbers of economists knew the original plan was a turkey. Perhaps Democrats bent to pressure from banking industry lobbyists.
This crisis could last a long time. Hopefully, the Democratic majority in the House and Senate will last a lot longer. If that is the case, members of Congress have to improve their game. They need better, more experienced, FDR-progressive economic advisers. Whoever has been advising them so far has given bad advice. If they are lobbyists, Chairman Frank should kick them out of his office. And if they are staff members, well, it’s time for new staff members. Last week’s bad plan has hit all our pocketbooks too hard for our leaders to suffer fools lightly.