Your facts are interesting. But you have the bailout scenario all wrong. What actually occurred was that the American political candidates could not get enough backing and funding from the American people in order to get re-elected, or in Obama and McCain’s cases, elected. The majority of Americans are sick of the two political parties system and those two parties agendas which have progressively moved away from our roots and Constitution. So, since they could not get enough private donations, they took out interest bearing loans at a rate, as you can see, that exceeded the GNP of most nations in order to get elected, and then those banks cried poverty in order to get those sums repaid, billing it as a public debt instead of a private debt against those candidates. Obama sold out his own children to get elected, is what happened, as did McCain to run his campaign. The market, of course, then crashed and the entire bailout was placed under the jurisdiction of the Secretary of Treasury to keep the details out of public view.

American politics has reached a new low, and those in Washington sold out their own kids, and all of America’s children, in order to remain in office. And affected the world markets also in the process.

With the American people the greatest victims of all, to the tune of $2,500 approximately for every man, woman and child in this country.

Here is how I understand the problem:
Businesses depend on short term loans for day-to-day operations like paying us our salaries. The businesses cannot afford to keep piles of cash lying in a vault for weeks not earning any money, the money is normally invested in the business. They need to pay us, they take a short term loan, then they get money from a customer on a contract, they pay the loan back. The current freeze in lending market threatens all businesses, not just a few banks.

The link I posted above nicely illustrates both that there is indeed a lending crisis and that the industries that have nothing to do with either mortgages or the US are suffering. The article is the interview an executive of a Greek shipping company Excel Maritime gave about ships being stranded because the companies cannot get loans to pay their crew. The way it works – they pay the crew, deliver the goods, get paid, then repay the loan, pay dividends to shareholders and invest the rest of money into business. Without the original loan, they cannot deliver the goods, so they cannot make money. If they don’t deliver the goods, the businesses that want these goods suffer too…

This is a really bad situation. I may be wrong but I do believe that not bailing these companies out has a potential to hurt us a whole lot more than bailing them. I also think there is a good chance that most of this money will not be lost.

“The government should take the 700 billion dollars and start their own new lending institution.”
Now this is a cool idea. If they add three or four percent to the rate at which they borrow, it may still be a good rate for businesses, but the government will make money. Wonder why nobody thought of it.

I’m glad I wasn’t a Shareholder

I suppose everything your government does is exactly what you voted to have them do. Awesome.

This is just one example, but it nicely illustrate what the fuss is all about.

As to the individuals inside the companies being the problem, I couldn’t agree more. However, my point was aimed largely at the executive level. They get paid millions of dollars (through salary and/or stock options) and I believe it is their responsibility to prevent this from happening. With great power comes great responsibility. Many of them still get to keep their millions in this scenario.

I’m not sure how you’d take their millions away, but Kitty has it right, “those who made bad decisions are actually penalized the least: they are the ones who made most money and are likely to be least affected.”

Then businesses that deal with the bank start to suffer too…

I’ll leave you with this… because a lot of people withdrew everything they had in WAMU over the past 10 days… JP Morgan was able to buy the bank for cents on the dollar (they were already considering the buy out when it was at a higher price). This in turn made a lot of investors in WAMU lose even more, which does have a ripple affect on the overall market… especially given WAMU’s size. While they failed, WAMU was still posting over $900MM in deposits… that’s a pretty good number at the end of the day and is why they were able to sell and not go bankrupt.