Centerblue.org

With the emergency economic bailout plan going down in flames in Congress, and with financial institutions continuing to fail at an alarming rate (Wachovia being sold for $1 a share to Citigroup today)–I genuinely fear for the future of our nation. That’s not because I thought the plan was particularly good–I agree with Boehner that it was a "crap sandwich"–but because something profound must be done immediately. Perhaps it’s for the best, because the plan failed to address the number one problem causing the meltdown: the rapidly escalating foreclosures sweeping the country. Until something is done about this root cause, our economy will continue to slide into the toilet.

As Congress dithers, the rivers of credit that form the lifeblood of our economy have ground to a halt. People can’t get mortgages, they can’t sell their houses, they can’t get car loans, they can’t get student loans, they can’t borrow short-term money to fund business needs. Every day that passes under these conditions is another day that hammers towards the destruction of the American economy.

We need a plan and we need it now–but one that stops the foreclosure bleeding and thus stopping the crisis at its source. It’s slow, it’s enormously expensive to administer. But if it’s a choice between buying toxic mortgages of unknown worth from failing banks for $700 billion, and helping homeowners by freezing foreclosures and re-setting their mortgages so they can stay in their houses, I’ll take the latter any day. The fewer owners who default, the fewer overall losses ultimately experienced by the financial system.

Meanwhile–Dow down 720 points and counting.

I don’t think people truly appreciate the magnitude of the painful recession or depression that could result from this crisis. Nobody of recent generations remember the hunger, the 23% unemployment, the slicing of economic output by half, that this nation experienced in the 1930’s. We are not prepared as a nation or as individuals to deal with that.