We were all watching the Wall Street bailout vote. Will it solve the housing bubble?
The elephant in the room is dealing with our $11 trillion national debt and an annual deficit of between $500 billion and $5 trillion (depending whether or not we are including unfunded expenditures on our various trust funds).
Congress is busy blaming greedy Wall Street executives, and there is plenty of blame to assign to them.
But $700 billion to fix this problem is small potatoes compared to the national debt, and the unfunded liabilities of $80 trillion. These are the numbers that the financial world is looking at. Will the dollar continue to be the world's reserve currency? Can America clean up its financial act?
The greatest problem -- our excessive spending -- has been caused by Congress. Politicians have been so busy buying voter support with sugar and pork, that no one has been watching to see the long-term consequences for our country's future. We now have more people feeding off the government than we have producing goods and services. Congress runs deficits to hide this problem. Well, the future is here, and it doesn't look very good.
Is this bailout bill good for America? Will it solve the problem? It may be the best choice, though we don't know. We don't know the details. We don't know how much we will pay to buy up the bad debt. What motivation does a financial institution have to sell its paper at 50 cents on the dollar, which may be its market value? At that price, it could break more banks, or cost CEOs their million dollar salaries. Buying up paper doesn't solve the capital problem and the deflationary pressures this causes.
If the taxpayers get good buys, and if Congress inflates itself out of this problem, then the taxpayers may make money on this transaction and temporarily stave off a depression. We have both inflationary pressures (printing money) and deflationary pressures (contraction of capital and lessening of credit for loans).
But this bailout does nothing to solve the overarching problem, the annual deficit, $11 trillion in national debt, huge annual interest payments, and broke Social Security, Medicare and Medicaid trust funds. Without addressing these major problems, even a perfectly handled bailout will not do more than buy us a few months.
Alaska has a great future as long as the folks in Washington don't mess it up for us. They have messed it up, and now the question is, are they willing to admit what is wrong (excessive spending), who caused the problem (Congress) and will they build a plan to solve this problem?
In this coming election, we need to ask Ethan, Don, Mark, Ted, David and Bob: Do you understand our country's economic and financial problems, do you understand how we got here and do you have a plan to fix it? If the voters continue to be bought off with promises of special favors, sugar and pork, the national interest and the future of our country will never be addressed, until it is too late.
We have a great country, but our generation is on the cusp of blowing it for our children's generation because of lack of attention, and because we want the "quick fix." We have had 30 years of "appropriators" running Congress. Now we need to select "maintenance engineers, accountants and economists" to clean up their mess. Do we have the will and discipline to do so?
Dave Cuddy is a former state legislator, Alaska bank president, and presently manages a small film studio and develops real estate. He holds a BA in economics and an MBA.
By DAVE CUDDY