[IWE] Questions the press should be asking about the bailout.

[D. Scott Katzer]

Morning All,

A nice post I found via Digby this morning:

http://poynter.org/forum/view_post.asp?id=13611 :

"Ask this question -- are the credit markets really about to seize up?

"If they are then lots of business owners should be eager to tell how 
their bank is calling their 90-day revolving loans, rejecting new loans 
and demanding more cash on deposit. I called businessmen I know 
yesterday and not one of them reported such problems. Indeed, Citibank 
offered yesterday to lend me tens of thousands of dollars on my 
signature at 2.99 percent, well below the nearly 5 percent inflation 
rate. That offer came after I said no last week to a 4.99 percent loan.

"If the problem is toxic mortgages then how come they are still being 
offered all over the Internet? On the main page AOL generates for me 
there is an ad for a 1.9% loan (which means you pay that interest rate 
and the rest of the interest is added to your balance due.) Why oh why 
or why would taxpayers be bailing out banks that are continuing to sell 
these toxic loans?

"How does the proposal help Joe and Mary Sixpack who can afford their 
current monthly payment, but not the increased interest rate that has 
been or soon will take effect? Every day bankers work out loans with 
customers -- so why are taxpayers being asked to act when banks are 
largely on strike, refusing to negotiate revised deals with many loan 
customers?"

Questions like those need to be asked and answered.  If the problem 
isn't affecting anyone but the traders at the moment, but they're using 
the excuse that all of these bad mortgages are causing the problem, then 
  there's a disconnect.

As Barney Frank said in an interview yesterday, Paulson's and Bernanke's 
words have a way of becoming self-fulfilling because the market regards 
them as serious people.  In other words, even if there really isn't a 
liquidity crisis in most of the economy at the moment, one can develop 
if enough people think one is coming.  So, I'm not as confident that a 
bailout doesn't need to happen, and happen before, say, October 1.  But 
the Chicken Littles really don't have much credibility without more 
evidence.

Cheers,
Scott.