I just won $22,000!!!
Well I didn’t really win it, and the money isn’t technically mine, but I do have access to it. That $22,000 is my combined credit line for my two credit cards. As a young male I am really thankful that these companies trust me with this kind of cash! Let’s see… I could use a new pair of skis, a nice rain coat, a new cell phone, how ’bout a designer watch or a car! Let me just pull out my credit card!
But wait a minute, here. Why do I have so much money at my disposal? I’ve built my credit since I was able. As soon as I turned 18 I signed up for a handy “starter card” to get me trained on using credit. My limit of $250 was raised to $500 in six months after I paid my bills on time. Six months later I had $1,000 to spend. Fast forward two years and that figure jumped ten fold on that particular card. In the mean time, I signed up for JetBlue’s snazzy TrueBlue points card to help me earn free flights sooner (three round trips already!). My credit on that card doubled in two years.
I’ve been responsible and paid my bills off entirely every month. I don’t buy stupid stuff I don’t need. And very rarely do I buy things I couldn’t have just used my debit card on.
But, to me, this is a comment on what’s going on in our country right now – the crisis in our nation’s capital, on wall street and in the pocket books of everyday Americans. How can I, a measly 21 year-old college student, have so much cash so readily available to me when these giant firms can’t find the money to fix their own mistakes?
Luckily for me, I can pay my bills because I’m not dumb about what I buy. Home buyers weren’t dumb when they fulfilled the American Dream, they were just duped into what they thought were good deals. When the economy tanked they couldn’t keep up. See, I have zero to pay if I don’t buy anything. These people had monthly mortgage bills no matter what.
Leaders in Congress are in a tough spot – and rightfully so. I don’t care what anyone says, or where to lay the blame, but things have screwed up in the last eight years.
The House had an opportunity to fix things yesterday when they voted on the Bush Administration’s proposed $700 Billion bailout plan. True, it would have done little to help “main street” but what it represents is a lifesaver for our struggling American trading economy.
Constituents who call their representatives to complain that the bailout would waste their hard-earned money don’t understand how the American (and world) economy work. America is what it is in the world today because of the power of Wall Street and the money it represents.
Available credit is absolutely essential to economic stability. It’s complicated at the top but banks depend on each other to borrow money to conduct business. Take your savings account as a simple example. You deposit your money, the bank pays you a little for your trust and is then free to go use the money for other purposes – like giving loans to people.
On Wall Street the same principal applies. Banks are running out of liquid assets – the stuff that enables them to lend. When banks can’t lend others can’t barrow. When banks can’t barrow they can’t get the money to fund deposits, not much different than your savings account deposits.
The trouble is, most banks have put too much trust in new homeowners, depending on them to pay their mortgages. When mortgages are not paid banks lose a source of liquid cash and can’t use the money as planned.
Treasury Secretary Henry Paulsen would use the money appropriated from Congress to buy these bad mortgages, giving banks the cash they need to survive and Wall Street the borrowing power it needs to remain the world leader that it is so quickly becoming less of.
True, the opposite, a trickle-up idea is needed too, to give regular people more buying power. But it starts with Wall Street and the behemoth that is the overall economy. If Wall Street crashes everyone feels it.
It’s important that voters realize this and take one for the team. Taxpayers are not bailing out Wall Street CEOs, (there’s new provisions preventing that) taxpayers are bailing out their own good and the state of America in the world.
