I know that retail credit cards are a long way from the millions and billions in mortgage-backed securities that are bringing down one institution after another, but it’s why Main Street is not behind what looks like bailing out Wall Street. I would have been surprised if the $700 billion deal had successfully passed the House, despite the all-weekend sessions to get the leadership behind it and supposedly their members as well.

The entire House is up for election in a little over 30 days and neither the Administration nor the Congress has made their case to the voters of exactly how this gigantic deal is going to work a miracle in the finance world. We all see the news and understand that some of the biggest players like AIG, WaMu, Fannie/Freddie, Lehman Bros., have gone under due to this mortgage-backed securities fiasco. And we understand that similar things are happening in other nations for the same reason. However, no one has provided the information that would close the deal. News reports say the calls, faxes, emails, etc. are running 100:1 against the package. Any why not. We have not seen anyone held to account for this monstrosity. Sure, lots of workers in the failed investment banks have lost their jobs, but so far, no one, from mortgage brokers to securities packagers to bankers to executives to government agency watchdogs has been charged, indicted or even lost their job.

So far Sen. McCain is the only voice calling for SEC Chairman Cox to be cashiered. Instead its hard not to wonder if Cox isn’t going to get a Bush “heckuva job Brownie,” and go right on until the next President takes over.

Yes, I realize that the finance mess is indeed going to affect all of us. I’ve certainly seen my IRA nosedive over the last several months, then go free-fall today. And since most US workers no longer have pension plans, these IRAs and 401Ks are all we will have to live on besides a meager social security payment, if that’s still around. For those that do work for a firm with a pension plan, the short term could be even worse. As the investments in those pension plans lose value , the employer will have to pony up more cash to maintain the required reserve – if they have the cash. For some of the big guys, they may end up facing bankruptcy because they cannot borrow enough cash to pump into their pension funds.

Yes, I understand that there is a serious financial crisis. Yes, I understand that it may well take strong action by Washington to avert much more serious consequences. BUT, despite a good deal of research online and reading a variety of news sources, I do NOT understand how this plan and only this plan is clearly the solution. If the voters understand, then they can support their representatives’ voting for whatever measure seem justified. Until the members of Congress, especially the House, feel they can count on support for this unprecedented action back home, how can anyone expect them to just go along with it.

Yes, there were actually four credit card and/or convenience checks offers in today’s mail, including one from WaMu. Most of us would be more than willing to help a recovering alcoholic get back on their feet, but we have to feel like that they are in recovery and the money we contribute won’t just go for more liquor.

With the current financial system crisis or regulatory failure crisis, or greed crisis, depending upon your perspective, it is once again abundantly clear that we are losing jobs and much of the middle class due to an economy that has shifted from making things and selling them, to charging fees and commissions for moving numbers on a spreadsheet.

There has always been a place for finance professionals and there still is, but this century has seen financial services come to so dominate our economy that we are now facing a nearly trillion-dollar taxpayer-funded bailout of the U.S. finance system’s drunken orgy while countless Americans are trying to feed their family and pay their bills and stay in the house that they used to be able to afford with the jobs they used to have.

I’ve just finished reading an excellent book that examines how we got here and what may well lie in store for us, with abundant supporting data. Unless we make some major shifts in what moves our economy we are headed for the same fate that has caused several other formerly great nations to dwindle to a fraction of their former status.

The book is: Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism by Kevin Phillips.

Audio Author Interview on NPR, March 21, 2008 (approx. 7 min.)

Video of Kevin Phillips speaking on the topic April 28, 2008 (approx. 90 min.)

This book is available at the Tulsa Library in audio download and print versions as well as the various book sellers. I listened to the audio version, but realize that I missed a bit by not having the many charts and tables of data to refer back to as it went on.

Before you dismiss Phillips as another liberal Bush-hater, know that Phillips is a former Republican strategist going back to the Nixon campaign and has been credited for coining the term “silent majority.”

What makes this time in our history so hard is that a great many people that are not unemployed are very much underemployed. They have had to take jobs that pay much less and have less benefits as our economy shifts from innovation in creating things to build and sell to innovation in credit marketing, fee generation and the creation of financial instruments that nearly no one can really understand. Meanwhile we are inundated with offers for credit cards so we can buy all the stuff that is churned out in factories overseas that few of us really need to buy anyway. As our amount of disposable income diminishes, it will become impossible for this nation of consumers to buy much of anything outside of food, housing and utilities even with our pocketful of credit cards. That is the real looming train wreck.

People that are just trying to get by will not be buying an HD TV for every room in the house or a new car every three years or a $4 coffee and $3 scone for breakfast every day. You can’t make a consumer-driven economy work when a larger and larger share of your consumers are working $10/hour jobs with no benefits. Eventually they can’t even make the minimum payments on their credit cards and all those shiny things from the factories overseas just sit in the stores waiting for their turn on the clearance aisle. Even Henry Ford, not exactly a socialist, understood that he needed to make a car that his own workers could buy.

Financial services just don’t employ enough people to keep a large consumer-driven engine fed. They don’t buy raw materials, patent new ideas, do R&D or ship products. Not everyone in this country can work in health care or retail or government and keep a consumer-driven economy running.

I’m not saying that the government should stop the financial services business and force companies to open buggy whip factories and employ us all at $50 an hour. But, government tax policies can and do make a difference in what gets outsourced and offshored and what stays at home.

However, the biggest part of the answer lies with the tremendous innovation and creative ability of the people in this big free melting pot. What made the 20th century America’s century was not just factories, but the creativity that figured out new ways to make and do things and new things to make and do. There’s a reason that the international language of air traffic and the oil and gas industry among others, is English, and the answer is not the UK, much as I do like their ales and quaint roadsters.

Several other commentators, as diverse as Thomas Friedman and Boone Pickens have called for a new surge of American innovation in finding and delivering new sources of energy and much improved efficiency in currently available sources. When voices with this kind of knowledge and background yet divergent political perspectives start agreeing on a big issue, it’s time for the rest of us to consider it.

Thomas Friedman, Green the Bailout

Boone Pickens Plan