It's Only Money

So now we hear that the federal government is going to make 800 billion dollars more money available for bailout purposes, including 200 billion to banks and credit card companies, designed to unfreeze credit. Which means these institutions are supposed to loan us money again. The question being, will consumers want the loans, or have some of us gotten used to the idea of living with less?

So the government – meaning we -- is on the hook for trillions of dollars. Where is it coming from? The analysts tell us it’s going to be printed. If you print more money, is it worth less?

Look, I couldn’t even tell you how many zeros there are in a trillion, though by now I should know. I used to tell people I had a six-figure income, but that I wasn’t happy about where my employer put the decimal point. But if it were my job to figure all this out, I’d be on TV like all those other analysts, including the guy who won the Nobel Prize. As they say, that’s above my pay grade.

It’s all about results. It seems to me that it probably doesn’t matter if all this extra money is worth the paper it’s printed on, as long as buyers and sellers think it is.

It’s true that many of us have to be weaned off carrying excessive debt; it’s also true that financial institutions have to be prevented from giving us a fix whenever we want it. But while we’re congratulating ourselves on not buying stuff, the vendors, who are people just like us are suffering from our sudden frugality. If we don’t have a good holiday season, neither will they.

Something has to start the engine, though, and after that, something has to keep the RPM down. I think this is a soluble problem, but somebody has to do the solving, whether it’s the Bush administration or Obama’s, and I can’t blame either of them too much if there’s a false start or two. Doing nothing doesn’t seem to be an option.

So start the presses.

There, now I’ve said it.

Working the System

A lot of us are pointing fingers at the financial whizbangs and the CEOs that we blame for getting us into this meltdown situation. But the questions remains, were they doing anything illegal, or just working the system?

The FBI is said to be investigating many of these people now. But for the moment, it seems our favorite villains were playing with the cards that were available, according to the rules.

Who among us can say that we never worked a system if it was in our favor? Our accountant turned us on to a quirk in the law that lowered our taxes. Someone we knew got us backstage into a concert, even though we had no real reason to be there. Our uncle was the chief of police, so we didn't get a ticket when we should have. There are probably many variations of this. How many of us refused to work the system when the cards were in our favor? It's OK, you don't have to answer that.

The solution, of course, is repairing the system to that people can't work it any more, or at least not as easily.

Following the Wall Street collapse of 1929, some regulations were put into effect that are still bnefiting us today. If they weren't in place, we'd really be in a pickle. But not every loophole was plugged. And when it comes to money, new loopholes open up as the financial wunderkinds put their creativity to use.

So, we learn by experience --  in most cases, the hard way -- but we do learn. After the earthquake comes and the buildings collapse, the buildings that go up in their place are usually able to withstand greater shocks. That's what will happen when this current crisis passes.

Let's make sure we are grateful for the lessons learned -- and make sure that our leaders turn them into policies that protect us going forward.

There, now I've said it.

Feel the Pain

This financial crisis can get you thinking what things cost and what they're really worth -- and how we've been insulated from having to deal with pain.

Let's take housing. In California, it's very expensive in some markets, thought not what it used to be. The price of a home was driven up in the Bay Area by a lot of factors  -- fear being one of them. Prices got bid up because folks felt that if they didn't get into something ASAP, the price would go even higher, and they'd be out of luck. Plus, the dot-commers out there, many of whom made their money on products just as ephemeral as today's investmnent bankers, had money to burn. The rest couldn't afford to compete unless they got a banker to give them a loan they weren't qualified for to buy a house that probably wasn't worth the zillions being charged -- or shouldn't have been -- but that was what the market bore. You find out what something is really worth when the market collapses  -- but we're insulated from those things, most of the time.

Take insurance. No one living could afford to pay the out-of-pocket costs for health care these days, so you have to have insurance to insulate you from that level of pain. So the hospital charge for a toohbrush is $40. Your insurance company pays it because it's "reasonable and customary." OK, so maybe they only pay $25, and you get the bill for the rest. Then you get angry, because you wonder why they're charing that much for a toothbrush in the first place. If you -- and everyone else --  had to pay for it totally out of your pocket, would the hospital be able to charge that much for it? 

There's another thing about insurance. It's like one of those bulletproof vests the cops wear. They're great as long as you don't get shot in the legs or the head. That would hurt! Folks are finding out that they're really not insured against all that much.

Take the Iraq War. Lots of people thought that was a good idea -- a lot more people than those getting blamed for it now. Most Americans were insulated from sacrifice. The cost of the war wasn't really part of the federal budget. There were no war bond rallies, like during World War II, to raise money for it. And instead of a draft, the government just called up National Guard and reserve units to take on multiple tours of duty. Many of these have been some of the top prfofessionals in oucr communities, not kids just out of college. But unless you are part of a family that lost a loved one, you probably haven't felt very much, because your daily life hasn't been interfered with at all. If there were a draft, do you think there would have been an Iraq War?

Sometimes it's better to feel the pain, to have to pay the real cost of something.  Feeling pain often protects us from real harm. Maybe this financial crisis will strip off the insulation and make us sit up and pay attention.

There, now I've said it.