The Fear Economy
The Public
Monday's market crash that wiped out $1 trillion of shareholder value was tangible evidence that Main Street (an overused but descriptive term) would be affected by the credit crunch. The constituent attitude changed quickly from "don't bailout fat cats" to "take care of my portfolio ASAP" and spurring today's Senate vote on an alternate version of the Bailout Plan:
From New York Times:
Europe's banks are now bailing out their banks, and all the Central Banks are coordinating capital infusion to keep the credit markets liquid. We're all in the same boat now.
After the public, and the political and the economic institutions caught a glimpse of the potential economic abyss Monday, coordination to action gelled. Tuesday's market bounce was predicated on the expectation that a bailout is necessary to unlock the current credit crisis that started with Lehman's failure.
Monday's market crash that wiped out $1 trillion of shareholder value was tangible evidence that Main Street (an overused but descriptive term) would be affected by the credit crunch. The constituent attitude changed quickly from "don't bailout fat cats" to "take care of my portfolio ASAP" and spurring today's Senate vote on an alternate version of the Bailout Plan:
From New York Times:
Global Central Banks CoordinateOn the morning after the sell-off on Wall Street, Congressional offices reported a shift in angry calls from constituents, with some now demanding that lawmakers take some corrective action — a distinct change from the outpouring of public opposition that contributed to the defeat of the plan.
“I started hearing from a lot of people who lost money on their investments thanks to the big drop on Wall Street yesterday,” said Representative Steven C. LaTourette, Republican of Ohio, who voted against the plan.
Europe's banks are now bailing out their banks, and all the Central Banks are coordinating capital infusion to keep the credit markets liquid. We're all in the same boat now.
The ECB, which has been unwilling to lower its key interest rate amid
persistent inflation threats, may relent in coming months in the face
of increasingly dismal economic data.
Some Form of Bailout seems a GivenAfter the public, and the political and the economic institutions caught a glimpse of the potential economic abyss Monday, coordination to action gelled. Tuesday's market bounce was predicated on the expectation that a bailout is necessary to unlock the current credit crisis that started with Lehman's failure.
Wonder if yesterday's 400 point rally changes any tunes? This too shall pass. Let's not panic and bloat the government even more.
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