Recently, I wrote a post about the need for more Federal regulation of the trucking industry. Obviously it's not just trucking that needs more regulation - the housing and credit industry is badly in need of it as well.Republicans and Democrats have turned the other way long enough. All the talk of a free market economy with less government regulation has resulted in government bailouts, bankruptcy, crash mergers and the deepening of the recession that began a year ago.
What we have here is the Bush administration, along with Congress controlled by Democrats, that have enabled this mess to occur. Enabled is the key word here. This could have been prevented by the Fed tightening up policy and the much overburdened SEC keeping a closer on eye on unsecured lending practices. Some of these problems actually go back to the Clinton administration, when regulations were eased. Imagine a hot air balloon of unsecured debt and bad housing loans. Up and up it went. Now, suddenly, the air is coming out, faster and faster. And the balloon falls back down to earth. Well, today it landed with a big thud.
The resulting auditing autopsies will give us the details of why this happened. Right now, Fannie Mae and Freddie Mac are part of the government, Bank of America just bought Merrill Lynch and Lehman Bros. has declared bankruptcy. With just these "deals" alone, potentially 50,000 people could lose their jobs. Lehman's debt is 50 times greater than Enron, which went under 6 years ago. For the middle class, car loans, home and home equity loans will be much harder to get as credit requirements will get tighter and tighter.
The Dow went down 500 points today. Look for your 401K, which you have watched shrink, to lose more value. Today about $700 billion "disappeared" from government pension funds, retirement plans a variety of other investment portfolios. A.I.G (American International Group) is in trouble. And McCain and OBama have no presented any rescue plan, despite a large entourage of economic advisers and experts. Overseas, the markets in Asia, the Middle East, Russia and Europe have all be negatively impacted by the tumult here in the US. And, it all will definitely get worse before it gets better.
The credit for the photo is http://www.davidhorvitz.com/if/hot_air_balloon.jpg
