Sunday, Sept. 28, 2008 | 2 a.m.
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“Deal or no deal?”
That happens to be one of my favorite television shows because it takes ordinary Americans and gives them a chance — if they are willing to take sometimes unreasonable risks — to win a million dollars or some other life-changing amount of money.
At the end of the show some people go home with American dream type dollars and others go home with little more than what they came with. Everyone has a good time, advertisers are happy, Howie Mandel’s stock continues to go up and those who watch are entertained for an hour.
“Deal or No Deal,” however, is television. It is not real life.
Real life is happening as I write this column Friday. Senate and House negotiators are grappling with an unprecedented opportunity to stabilize a very unstable American economic system — hopefully preventing a 1929 stock market collapse and accompanying economic disaster. If they can’t make a deal, predictions run the gamut from total financial devastation, to market corrections worthy of a blockbuster movie, to “let the chips and bank notes fall where they will” and it won’t be that bad — for some.
By today, a deal may be struck and the markets will react positively Monday morning. If the politicians are still talking Monday morning, the markets may take another dive. To that I say, so what? Investing in the stock market has always been a bigger gamble than “00” on a roulette wheel. Once in a while there have to be some losers. It is the American way!
Since Treasury Secretary Henry Paulson came up with the idea for a bailout, I have favored his plan as a big idea that needs to be implemented to free up the congestion, which is freezing our banking system and causing havoc not only on Wall Street but, more importantly, on Main Street.
As usually happens, though, when big ideas hit the legislative branch in this country, all kinds of questions arise. Often, they are questions with no clear answers. And therein lies the problem.
I wonder whether the president of the United States had called upon Congress to figure out some kind of bailout of the country’s financial system a few weeks before the 1929 crash, whether people would have jumped out of Wall Street windows ahead of the worst financial debacle this country ever faced?
Hindsight suggests we would have been better off had such a meeting been called. And I believe our country will be better off if Congress can come up with a program that will do what the Treasury secretary says is required. And that is to unclog the credit system.
Just in case they haven’t reached a deal, I’d like to add my two cents — as if that will make a dent in the multitrillion-dollar mess we are in.
First, no plan is worth the taxpayers’ money if it doesn’t require the banking system to issue mortgages and reasonable loans to ordinary people who are in grave danger of losing their homes and their small businesses. These folks have lost much of their savings and other assets in this meltdown, so to ask them to chase more bad decisions with their tax money without their being beneficiaries of the bailout is immoral.
Second, if I understand it correctly, Congress has been considering giving the discretion to invest $700 billion of our money to the Treasury secretary, to act, practically any way he sees fit, with little or no oversight or recourse. That’s nuts!
Henry Paulson is probably the smartest financial mind in the room — especially when he meets with President Bush and his cronies — but he is, at best, the Treasury secretary for the next 100 days or so. And his successor may not be as capable or knowledgeable. None of us gives people in our own businesses that kind of discretion, why should we do it in this case?
Third, why do we need to spend so much money so fast? When I need to borrow money, prudence and the bank say take the money in tranches. As you hit certain milestones, more will be released. If it is clear this new program isn’t working, at least we won’t have spent the entire treasury on a bad idea or some bad execution.
And, fourth, none of this should happen unless the shareholders and investors of the banks and other financial institutions are the folks who lose in this deal. Taxpayers have lost and stand to lose a lot more. Those who rode the wave in the good times must be the first to lose in the bad times. The taxpayers should be the winners if those assets increase in value — just like any other investor.
I don’t know how this will all turn out. What I do know is that I and millions of other Americans have played by the rules, taken acceptable risks and refused the riskier ideas that would have made us all wealthy overnight. It isn’t fair that we are the folks who will be left holding the bag while Congress makes winners of the losers who caused this problem in the first place.
So, America, deal or no deal?
This is not television. We can’t afford to guess wrong this time.
Brian Greenspun is editor of the Las Vegas Sun.
