So I can understand some confusion in the financial markets this weekend. & What would the administration do to protect Lehman Brothers? & How will Merrill Lynch's survival be tied to some vital sector of the economy?
Then the big surprise from Treasury Secretary Henry Paulson. Nothing. They aren't . &
The world didn't revert to some kind of anarchic barter system, and stockbrokers didn't throw themselves from their windows. & The Dow Industrial Average dropped about 500 points on Monday, reflecting the market's perception of the value of the companies comprising that index. & Sounds bad, unless you want to rephrase it and say that the market dropped about 3 percent, or was slightly less volatile then some of the recent retail price swings for gasoline.
More importantly though, the damage was contained. & The financial hit was spread among the people who invested in those companies and did business with those companies. & People who made the choice to interact with these companies, and either researched their risks or chose not too research their risks. & But taxpayers are not paying to compensate those who chose not to research their investments. & Those who chose to avoid the current market will not be guaranteeing the returns (via the IRS) of those who chose to take certain risks and hoped for speculative rewards. & Brokers and brokerages can be held accountable, or not, by their clients, and everyone else can stay out of it. &
Despite John McCain's assertion Monday that the economy was still "fundamentally sound," there are serious problems. & Many, many Americans are seeing their savings and investments erode in value. & Eroding home values in particular can cause financial stress that can lead to the breakup of financially stressed families, and postpone or eliminate many personal goals, like higher education or retirement.
But at what point is this of concern for the federal government? & At some point isn't the demise of the institutions that got us into this mess a good thing that will create an opportunity for new businesses that learned something from the failures of the Merrill Lynches and Lehman Brothers? & I was beginning to suspect we'd never know, at least under the current administration. & Now maybe we have a chance.
