Because it’s not Wall Street pitted against Main Street.

I’m always put off by news commentators and especially politicians who set up this false dichotomy of Wall Street vs. Main Street. The businesses and savings of Main Street are dependent on the credit facilitated by Wall Street – like it or not, we are ALL intricably linked.

When credit conditions are so bad that Treasuries briefly returned negative yields (meaning that people PAID for the privilege of loaning the government money), cities are shut out of the bond markets, companies can’t get the short-term loans they rely on for payroll, and banks won’t even lend to each other, no one (especially not middle-class Americans) gets off scot-free.

This article in the New York Times explains:

In 1929, Meyer Mishkin owned a shop in New York that sold silk shirts to workingmen. When the stock market crashed that October, he turned to his son, then a student at City College, and offered a version of this sentiment: It serves those rich scoundrels right. A year later, as Wall Street’s problems were starting to spill into the broader economy, Mr. Mishkin’s store went out of business. He no longer had enough customers. His son had to go to work to support the family, and Mr. Mishkin never held a steady job again. Frederic Mishkin — Meyer’s grandson and, until he stepped down a month ago, an ally of Ben Bernanke’s on the Federal Reserve Board — told me this story the other day, and its moral is obvious enough. Many people in Washington fear that the country is starting to spiral into a terrible downturn. And to their horror, they see the public, and many members of Congress, turning into modern-day Meyer Mishkins, more interested in punishing Wall Street than saving the economy.

For the complete article, click here.

The Senate is voting on the bailout / economic rescue plan tomorrow. I hope that Congress shows some leadership during these times. I hope the House and Senate members stop worrying about their elections in the next six months and start thinking about how to mitigate the worst case scenarios.

I’m surprised at the failure of the bailout – from what I heard over the weekend, it was widely expected to pass.

Frankly, I don’t know what to think about the bailout. On the one hand, privatizing profits but socializing losses is a recipe for unbridled and excessive risk-taking. One can say that Wall Street got itself in trouble, and it shouldn’t need taxpayers for a bailout. On the other hand, it’s never a black-and-white issue of Wall Street vs. Main Street, where when the former loses the latter wins. Wall Street’s problems continue to flood Main Street. Frozen credit markets affect everyone – the college student looking for a loan, the newlyweds seeking a mortgage, small business owner trying to expand, and the applicant searching for jobs.

$700 billion is a huge amount, but what would a deep and prolonged recession cost the economy? The bailout is hastily put-together, but is it TOO hasty? The difficulty is that no one really knows the answer.

I don’t know what’s going to happen, but I AM looking for some sort of action from Congress. Even though this vote on bailout failed, I think there will be another round of voting / revisions to the measure.

In the meantime, I’m contributing to the problem by pulling tighter my purse-strings.