Economic rant

Today the Dow had its biggest single-day drop. Or did it? Yes, if you look at the 777 point drop. But it's percentage that matters, and we're talking about 7%. Now that is still bad, but I learned this stuff in 6th grade when I read How to Lie with Statistics. Didn't anyone else? In terms of percentage drop, this is in the top 20.

I don't know the details of the bill that failed today, but it seems pretty clear that it didn't pass because of the outcry from constituents complaining that that government is bailing out the fat cats. People, people. This is why we have a republic, not a direct democracy: because folks who don't understand economics should not determine economic policy. And I'm no economic expert, I'm just going off the one year of economics I took in college. But I do know this: if money stops moving, we are all in deep, deep doo-doo.

"Don't bail out Wall Street," you cry. Well, today's sharp drop is a shot across the bow: If you don't let your representatives vote yes, you will get your wish and the system will self-correct. And once you've lost your job, and entires companies have gone under, maybe you'll ask yourself if it was worth it.

Comments

[Jason]

I have too many thoughts on this. Self-correction is worth it, there are thousands of small banks still lending and ready to step up if larger banks fail. Remember everything in moderation, too much prosperity and in our case self-indulgence is a cry for the discipline of a severe recession. Without living through pain there is no understanding. Yes, 401K's are suffering, but in the free market there is always someone who can benefit off of the failure of others and rise up. Yes, regulation is good, and yes, letting the market resolve itself is good. The best proposals I've heard seem to revolve around a plan similar to the Swedish nationalization scheme during their bank failures in the 90's. (see http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em). Voting yes on the current plan is not the best option, the immediate doomsday portrayed in the media is not too likely. We probably have until January with inaction until a total meltdown occurs. Plenty of time to craft a more responsible solution.

[Jon]

"Thousands of smaller banks still lending and ready to step up if larger banks fail"? If we think of it in network terms, the backbone is in danger and probably needs to be replaced. Jason, I agree that things don't have to happen today or the sky will fall tomorrow, which gives lawmakers a chance to improve the plan. At the same time, a 3-month window is close, too darn close. The poison has worked through the system quite thoroughly.

A couple more thoughts. First, Bono: "It is extraordinary to me that you can find $700 billion to save Wall Street and the entire G8 can't find $25 billion to save 25,000 children who die every day of preventable treatable disease and hunger. That's mad, that is mad."

Second, I encourage all reading this to pray for your neighbors' finances. I have made prayerwalking my neighborhood one of my spiritual disciplines, and one of the things I can pray for is financial safety. Pray for their jobs. Pray for their savings. Pray for the 401Ks of retirees.

[Helen]

With so much uncertainty in the market place it is comforting to know that God is still in control. Not that we won't have to suffer, but He is in control of even that. God told Jor that the life of a Christian is like a hockey stick graph, like this one:

http://maybeitsnotwarming.com/wp-content/uploads/2008/02/hockey-stick-co2-graph.jpg

One day everything with just keep going up!

[Jon]

Further up and further in, Helen!