I think most of us yesterday were poised to empty out our 401Ks and stuff the cash under our matresses, as the Dow Jones suffered it’s largest point (not percent) drop in history – 778 points, or roughly 7%. Everyone freaked out when Congress (thankfully!) didn’t pass the $700 billion bail-out bill that Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke proposed last week after the collapse of Lehman Brothers and several other key Wall Street players.
One thing Americans do well, however, is keep the faith. We hoped it would get better, and today is has: the Dow went back up 485.21, a gain of 4.7%. Several other vital indicators rose as well: the S&P 500 index recovered 58.35, or 5.3%, and the Nasdaq composite index rose 98.60, or 5.0%.
There is speculation that this recovery is mostly due to a belief that a new bail-out bill will pass on Thursday, when Congress meets again. This belief is significantly rooted in the fact that the credit sector, where most of this crisis finds its origins, is still showing no sign of relief. In fact, the benchmark London Interbank Offered Rate, or LIBOR, that banks charge to lend to one another rose sharply, making it more expensive and difficult for consumers and businesses to borrow money.
Hopefully if and when a “bail-out” bill does pass, it will include to some degree the following provisitions, rather than giving Bush’s treasury secretary carte blanche to use taxpayer’s (our!) money:
- Limits on executive salaries: There is no reason we should be paying for so-and-so CEO’s house in the Hampton’s when he/she presided over one of the US’s biggest finacial crises EVER.
- Compensation for the public: Why would we care to save these greedy companies, who showed no regard for the average consumer when they offered sub-prime mortgages, etc., when we don’t even have the possibility of benefiting from their salvage. I want STOCKS.
- More regulation: I’m not a fan of the socialist nanny-state, but at the same time, the Republican policy of “less government is better government” has bit us in the ass for eight years running. Let’s get some rules in there folks. Infinite cash + no boundaries is ALWAYS a bad idea. Just look at Paris Hilton!
What else do you think should be included in the bail-out bill, before you’d be ok with it passing?