Wednesday, September 24, 2008

The market

I know I'm beating this like a dead horse. I'm a complete socialist. What is going on is very important.

There is so much populist sentiment. People need help.

People think about "The market" as stocks. This Crisis is not about stocks, Though if you help the problem. The result is to help the companies in this country that provide jobs. But this is not important. I don't care if Pepsi benefits.

There is an entire different part of the market called the credit market. Part of how it works is like this:

A company like, REI goes out to the credit market, and borrows 200 million for 2 years, to build a new store, that store provides jobs for people like you and I Gets us health care etc. After 2 years they may go out and borrow more money to start a new store, or they still need 100 million to keep business going.

What is going on, is that that credit market is trying to stop. There is no confidence in that system. So, what will happen is that When REI comes back to borrow money to stay in business. They can't do it. there is no money to borrow. So.... What do they do? Close stores.

That company closes stores, then it's employees can't pay their bills. This causes more pressure on the economy. More companies close, More pressure on the economy, More companies close.

The second important part of that market is that it's used to provide you with Credit. The loan on your home, was processed through that market, The credit card in you pocket is processed through that market. If that Market locks up, Nobody will be able to buy a home for a while. and worse you could get a call from the credit card company.. "Sir, we have closed your account. You will no longer be able to borrow any more.". You may not be able to borrow money to buy a car. Small business loans will be hard to get.

SO... as much in support of "POWER TO THE PEOPLE" and kill the Fat cats.... No Bailouts... to call it a "wallstreet" bail out, isn't quite fair.

Having a working credit market is good for everyone.

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