Markets Rebound, Cash or Credit

After one of the worst week in Wall Street history, the Dow rebounded with a gain of more than 936 points. We are finally getting some good news from Wall Street. The rebound is believed to be a reaction to news that several central banks from around the world including the Federal Reserve will be giving banks that are in turmoil short term funding. The thinking is that by infusing the banks with cash, it will help thaw the frozen credit markets.

Speaking of credit, it has become very difficult if not impossible for people to obtain mortgages or auto financing during this financial crisis. Banks are very skittish at the moment. You know its bad when banks are afraid of lending to other banks. I’m sure everyone is watching and waiting to see if the government’s $700 billion bailout plan will make a difference.

I remember when I was a kid, not many families had credit cards. Credit was for the rich. Back in the day, we use to have a cash market. If you needed a new refrigerator or a new mattress you paid in cash. Credit wasn’t so easy to get back in those days especially for minorities. If you didn’t have the money for something you needed and didn’t have credit, there was this great program that was very popular called “layaway”. With layaway, customers could pick the items they wanted, have a store put it aside with a deposit, usually anywhere from 10-25%. The customer would then be able to make small scheduled payments on the item until it was paid for and then could take possession on it. I can remember lots of stores that had layaway, Lionel Play World, K-Mart, Wal-Mart, J.C. Penny and Sears. Now, you would be hard pressed to find a store that has a layaway plan.

In today’s troubled times, the middle class needs layaway now, more than ever. Perhaps we are going to learn a lesson from the financial crisis and move back to a predominantly cash market. We will buy only what we can afford. We will buy the cars that match our bank accounts and not our personalities. We will no longer be the fast food society of “I want what I want, When I want It.” I think if anything should be learned from this is we need to live our wage and not above it.

We Finally Hear From Gov. Palin Herself

Well it finally happened, the interview with Alaska’s Governor Palin. Charles Gibson’s interview with John McCain’s running mate was the first of several interviews to air. I now know why it took them so long before they let her sit down with reporters. I wasn’t impressed with her answers. Charles Gibson and even the women from “The View” having interview John & Cindy McCain, have gotten criticism for the questions they asked. First off these people are running for the most powerful position in this country, not the PTA. They need to be asked the hard questions. They may not like the questions, but the people want the answers to them.

Governor Sarah Palin certainly has the republicans party fired up, but what concerns me is how she downplays the state of economy. Just days after the interview aired, Wall Street stumbled. The markets went down, Lehman Brothers filed for bankruptcy, insurance giant AIG is in trouble and Merrill Lynch has been sold to Bank of America. What is the “appropriate role of government”? I would think it would be to help stabilize the American financial system?

Gov. Palin told Charles Gibson that “our economy is weak right now.” I think weak would be an understatement. She says that Government should play an appropriate role, but what exactly will that role be. John McCain has flip-flopped on the issue of government bailing out Wall Street. McCain said that government shouldn’t get into the mess that irresponsible Wall Street executives made. But after the Fed announced an $85 billion dollar bailout of AIG, McCain’s tune changed to sound a lot like that of the White House.

Even with the bailout of AIG, Wall Street reacted to the news, and the markets took another tumble. The economy is more than just weak, it’s a disaster. Banks are struggling to stay afloat. Rumors are floating that Washington Mutual is up for sale. I call it homemade financial terrorism. The Housing market and sub-prime mortgages burst, now banks, insurance, stocks are falling.

All before now McCain has been saying that the market will correct itself and now action is needed. But I disagree. The numbers speak for itself, unemployment is up and don’t forget the number of people that have exhausted their unemployment benefits and not found jobs. They almost never get included in the figures which would make the unemployment rate significantly higher than those announced by the government. Homeowners across the country are on the brink foreclosure.

AIG’s bailout, whether we agree with it or not was done with taxpayer money. So if AIG is getting bailed out, I think struggling taxpayers deserve a bailout as well. If Sarah Palin’s interview is any indication of what’s ahead if she is VP, then I’m pretty concerned.