Who's Up For a Recession?

I just watched the President's address regarding the "economic crisis." This is the first time since his 2001 inaugural address that I've been able to sit through an entire Bush speech. I read the transcripts of the state of the union each year, but I simply can't watch the man speak in public. It's painful.

But tonight was different. The economic mess we find ourselves in came to fruition under Bush's watch. And if he doesn't find a quick fix, the resulting recession will be his legacy. I'm also fairly certain that Bush realizes the fate of his GOP successor, John McCain, hangs on the current administration's ability to bail out Wall Street. Either way, Bush needed to sell his plan tonight to throw the financial sector a lifeline. So he stuck to the script, didn't entertain any questions (thinking on his feet is not his strong suit) and remarkably, didn't smirk. It was Bush at his most watchable. Only took 7 years.

The key provision of the Bush plan is to take $700 billion of the taxpayers' cash and use it to start buying up bad mortgage assets. The government will sit on these assets until they rebound at some point in the future and then sell them off, mitigating the initial $700 billion investment. But don't worry. None of that money is going to end up in the pockets of Wall Street executives. Because after we cut this enormous check, Congress is going to legislate new methods of oversight. Isn't that backwards? Shouldn't we change the rules of the game, then dump boatloads of money back in the market?

I respect the efforts of those individuals who want to try and prevent the collapse of major financial institutions. For better or worse, there are thousands of jobs, and billions in investor assets at risk. The same sidewalk-loitering, interview fodder on the local evening news who say, "it's their dumb mistakes, why should we pay?" are the same people whose 401k's are going to tank and who won't be able to get approval for a Gap card if this situation continues unchecked.

But there is a select group of people out there who wouldn't mind a helping of recession, and I'm one of them. We're the same folks who have are saving for retirement, protecting our credit, investing prudently and purchasing homes we can afford. And through fiscal common sense, we have managed to insulate ourselves from market corrections. And that's what this situation is. It's not economic catastrophe. It's not a crisis. It's a correction. Maybe you remember 9/11, Enron, etc. back in 2001? Same deal. From time to time, the market must realign itself. And there are always casualties. Last time, the government bailed out airlines. This time, it's brokerage houses who backed the wrong pony.

Now that Bush has publicly made his case, the reactionary masses are going to demand a bail out. There are too many baby boomers nearing retirement who haven't sufficiently reduced the risk in their portfolios. I'm sure that within the next week or two, we'll probably pick up the tab for at least half a trillion dollars worth of bad mortgages. And as result, we'll save a whole lot of retirement funds. But that only prolongs the problem.

Credit needs to be tough to get, or the cycle will repeat itself in short order. Nobody wants to see jobs lost or nest eggs evaporate. But until we force lenders to accept responsibility for the consequences of their determinations of creditworthiness, we ignore the fundamental cause of the current situation. Will we fund a bail out? Yes. Should we? Probably not. That's how capitalism is played.