$700 Billion “Bailout” or is it a “Financial Rescue Plan?" Impact on Main Street

Excuse me. I keep referring to the $700 Billion as a “bailout.” The new politically correct term is “financial rescue plan.” Call it whatever you wish, but the reality is the Washington politicians have killed the chance, at least for today, of passing a bill to address the turmoil on Wall Street.

And what about Main Street as this bloody fiasco unfolds. We have the largest liquidity crisis in modern times.

Banks are not lending money this last week. The jumbo loans are going away for homes. First time buyers are disappointed at the prospect of not moving their family into that new home. Second mortgages are disappearing. Sellers cannot sell properties they need to dispose of, and buyers needing a roof over their heads will have to wait. Interest rates are rising, pricing people out of real estate.

A reality--employers cannot borrow money to make payrolls this week. Employee layoffs, if not occurring today, will actually start tomorrow morning. Small and large businesses cannot borrow to buy inventories to stay alive. Consumers can forget financing that new car. College students are facing the reality of fading college loans. Do you have money in an IRA, 401K or pension plan that is invested in stocks as most of us do? Then 7% of your retirement funds just evaporated in one day with the 777 point drop in the Dow as the House failed to pass a bill.

This is not the end of the world! But it sure feels like it this week. Let’s hold our politicians accountable for this mess, whether we believe this bill should have been passed or not. Where is our leadership? This is America and its people deserve the best.

Sanity will return to our economy at some point. Hold on tight for this roller coaster ride as the “courageous,” partisan politicians continue to blame each other and worry about getting re-elected if they vote the wrong way.

Now...here’s my real estate pitch. Bless those brave investors who are liquid and have cash at this point in time. They are the ones who can buy real estate and financial assets and start us on a turnaround to recovery. They deserve to have the large gains they will make by buying low now and selling higher later.