The fallout from no bailout

Those "no voters" in Congress may start taking a new wave of phone calls to their offices once their constituents start to see the daily consequences of failing to pass the $700 billion bailout.

In my efforts to get smarter people to handle the heavy-lifting over here, Ed Paisley at the Center for American Progress goes into a pithy but pointed analysis of the fallout:

“It’s-a-Wonderful-Life” banking doesn’t really exist anymore, when banks took in deposits, made loans from those deposits, and earned a reasonable profit on the interest. Today, even deposit-heavy commercial banks borrow in the markets themselves to raise money to lend to borrowers and in turn sell those loans to institutional investors worldwide—earning vastly higher profits in the process. Unfortunately, after being severely burned after purchasing soon-to-be troubled residential and commercial mortgage-backed securities, these investors are not buying any debt, be it credit card, auto loans, or student loans that banks and other financiers want to package and sell to them. And the banks themselves can’t borrow except at extremely high rates of interest to make those loans in the first place. The consequence: a severe contraction in the availability of credit for cars, college, or retail purchases.

The failure of our banks is something that people will only be able to appreciate once it starts to play a heavy hand in their own lives. I'm thinking, soon enough, Congress will get the 12 votes it was missing earlier this week. Bet on it.

Also, my friend and fellow blogger J.P. - an honest-to-goodness "moderate" - invokes the words "pig" and "lipstick" in response to an editorial from the Fort Worth Star-Telegram that suggests "rescue" sounds better than "bailout." Watch it, J.P. You very nearly sounded sexist there.

UPDATE: For whatever reason, the nation's economic crisis has made me think back to the prescient words of "Mathematics." Powerlift the powerless up out of this.