I have spent quite a bit of time this evening writing to a number of elected officials regarding our current economic crisis.  Quite frankly, I was dumbfounded today when the House rejected the so-called bailout bill.  Not that I want to have the government shell out $700 billion, but that seems to me to be a bargain compared with the prospect of totally tanking our economy.  So far this year, we have seen the failure and/or fire sale of Bear Stearns, Lehman Bros., Fannie Mae, Freddie Mac, AIG, Merrill Lynch, Washington Mutual and Wachovia.  Several other major players all still teetering on the fence, and now Wall Street's panicked investors have shifted their sights to the regional banks.  The loss of market capitalization has been staggering, and it shows no sign of letting up. 

By my calculations, the failed institutions listed above have lost $590 billion dollars over the past twelve months.  That is just those institutions.  According to Wilshire Associates, the total estimated market capitalization of all U.S. stocks was around $50 trillion dollars in May.  Today, the market lost 7% of its value.  Based on that $50 trillion estimate, that would amount to $3.5 trillion, which is just a tad bigger than $700 billion... by a factor of 500 percent.  Now, you may ask, "What does that mean to me?  I don't own those stocks!"  Well, someone does, and they have taken a bath this year.  Who are these people?  In most cases, the brunt of the damage was inflicted on institutional investors, like say, pension funds, mutual funds, etc.  Perhaps your employer.  The bottom line is that we all pick up the tab in one way or another.

And that just scratches the surface.  This endless stream of failures is causing lenders to hold on to their cash.  They are terrified that they will be the next institution on the chopping block, so they need to hold onto every dime they can.  That means they are not going to loan you money to buy that new car or that plasma TV.  It also means they are not going to loan money to your employer, and lots of other employers out there.  On top of that, if less people are buying cars and TV's, that means less people are needed to make these products.  Either way, it means jobs are going to be lost.  Maybe yours; maybe mine.

Despite what both the Democrats and Republicans are saying today - that the other is responsible for the failure of the bailout - the real reason is that our Congressional representatives were inundated this past week with communications from their constituents opposed to the bailout.  The common opinion is that the bailout benefited Wall Street executives, and not the common person.  Unfortunately, we have few elected representatives with the courage to speak out and tell the voters why we must take action now.  In their absence, I have tried to lay out the facts as best I can.  The best thing we can do right now, is to let our representatives know that they must take action, and it needs to be sooner than later.  Otherwise, we will all be in deep trouble.