Reply #124: I think you're making my point for me

[anigbrowl]

Your assertion that banks would get the liquidity 'soon enough' is mistaken - this proves me point that the objectors don't have an answer for how to handle this short-term liquidity crunch. I know perfectly well that it's hitting businesses and causing them to fail now, which was why I considered it urgent to get the thing passed.

Frankly, I think I understand the magnitude of it rather better than you do, and don't see anything in that slideshow I didn't know already (although it's a fine summary). I've been following this issue for several years, since I've had a front row seat here in CA on one of the most inflated housing markets.

Thing is, I went though a similar situation in the early 1990s when I was living in Britain - overheated real estate market, subsequent crash & negative equity for many people (including me), and subsequent market pressure on the financial system as a whole, leading to a nasty recession. This situation isn't exactly the same, but it's sure similar enough that when I saw CA house prices growing at near exponential levels a few years back I started a deathwatch on it.

I am far from thrilled about the bailout, but it's a concrete step towards reform (even though it is a small one and many more will be necessary). The atlernative was to let the fed just keep pumping liquidity into the market and increasing M3 in the process, which to my mind has already been increased quite enough.