Economy, Rescue and Recovery

As the Fed announced the $800 billion plan today, to finance consumer loans and to push down mortgage rates - I was left wondering why it took so long for the govt. to think of rescuing the people. It's been a month, almost, since the $700 billion plan was announced to rescue the financial institutions - after they began to fail/fall like a pack of dominoes.

It only reinforced my unscientific, personal belief that govts. all over only react immediately whenever the giants fall. The average consumer has been bleeding for more than a year now. Mortgage payments are being defaulted; houses are being foreclosed. Didn't the govt. foresee this? Had they taken steps earlier, the rescue could have been limited to a few hundred billion $$$ rather than running the bill into trillions as is happening now. We could have even saved a few bank failures and job losses in the process.

If an individual is not fiscally responsible and fails to make timely payments - s/he is made accountable and made to face the consequences (both financial and legal). However, when it comes to institutions, if they fail - the people running them are let go without any penalty. Often times, they are treated with a severance package as well. And if the debacle is very bad and the insttn. is very big, it is shored up with a rescue package. As we are witnessing now.

Therein lies the fundamental problem with the way peoples and economies are managed/governed, I feel. Be it capitalistic or socialistic - a democratic society will have to take care of the people, first and foremost. When the focus shifts to institutions rather than the people - such society is bound to fail sooner or later. People, after all, are the backbone of any society.

I am glad good sense prevailed on the Fed and Treasury folks at least now and they plan on helping the comman man who's hurt badly. But, again without any scientific evidence, my gut tells me that this economy will not start looking north again until the summer of 2010 - and that's 18 months away, at least. We haven't seen the worst yet.

Wishing and praying for good times -

Swasti !!