Don't think of it as a Wall Street bailout. That's one Madison man's advice on coming to grips with the credit crisis, and the taxpayer financed rescue of the financial services sector . Jeff Cohen is a semiretired commodities trader who says it's important to look at this as more than just a bail out of Wall Street. "It's basically a bailout of the entire American economy," says Cohen. "Basically keeping Americans in jobs."
Cohen says the clogged credit markets represent a serious threat to the nation's economic health, since most large companies rely on borrowing to cover short term costs. He offers the example of General Motors building a new car. "They . . . borrow the money to buy the steel. The market that they borrow that money in has locked up. They can't borrow the money. If they can't borrow the money, they can't buy the steel, they can't build the car, so they have to lay people off."
While it's true that some banks and businesses do have money to lend, Cohen says they don't want to. "There's an interest rate called the LIBOR , which is basically an indicator of how much companies and banks are willing to loan to each other," explain Cohen. "That interest rate right now is at record highs. Banks don't want to loan money, and that's just locked up the whole credit market."
With many taxpayers opposed to it, Cohen has some worries that the bailout package may not pass out of Congress this week. "Americans in general don't like the idea, because they have the mistaken impression that it's bailing out Wall Street. And if some politicians decide that they're going to pander . . . they might vote against it. And that would be bad."
