Main Street Danger: Wall Street Dominos

(CBS)  Make no mistake: What happens on Wall Street affects the rest of us, on Main Street.

It is, says financial journalist and Early Show contributor Vera Gibbons, the classic domino effect.

And, on the show Wednesday, Gibbons told co-anchor Julie Chen Wall Street can't fix itself to get out of the hole it's dug for itself.

"We need a bailout package," Gibbons observed. "This is the worst financial crisis we've seen in decades. It's affecting the markets, it's affecting the economy. Something needs to be done. It looks like, by all accounts, something will be done soon."

"There is no confidence," Gibbons continued. "Confidence has taken a huge hit. Banks have made a lot of bad bets on real estate to the tune of hundreds of billions of dollars, lost a lot of money in the process. In the meantime, too, (we've) lost a lot of trust, lost a lot of confidence. And that affects Main Street.

"Now, there's a credit crunch, a credit freeze. People are going out there, trying to get a mortgage, can't get a loan, can't get a student loan, can't get an auto loan, none of that stuff. So, there's a broader impact on the consumer here."

That in turn deepens housing market woes, Gibbons says, since, "Housing values continue to go down because desperate sellers can't sell their homes to prospective buyers, because buyers can't get the financing. That's pushing prices down even more. In order for the housing markets to stabilize, you really need to wipe out some of that inventory. We have an over 11-month supply -- a lot of homes on the market right now sitting there. For stuff to stabilize, we have to get rid of some of that. And that will be awhile."

What's more, Gibbons points out, "Businesses are having the same problem in that the banks just aren't lending to them. So, they're not lending to them, they're not lending to consumers, they're not lending to businesses. So, we've seen more people lose their jobs. We've had over 600,000 layoffs so far. The unemployment rate is to up to 6.1 percent, a five-year high. It could go up to seven, seven-and-a-half percent sometime in 2009. Small businesses in particular are really having a difficult time. They can't get the financing they need to expand their operations, to buy new equipment, to hire new employees. And some of them can't even fund their existing payrolls. So more layoffs are inevitable."

Meaning people aren't spending. "That's the issue," Gibbons says. "They don't have jobs or they're losing their jobs, they're losing their homes. There've been a lot of stock market declines. Wages are virtually stagnant. Costs are going up -- the cost of living, everything from gas to groceries is up. Home heating bills are ridiculously high. So, there's no money out there to spend, which has caused a panic.

"Look what happened on Monday: Over $1 trillion in stock market value gone. Thankfully, we regained a lot of those losses yesterday. But people's retirement accounts or college funds have been totally wiped out. So, there's a wide sense of panic out there. No one knows how long, how deep this recession is actually going to be.

"It's depressing. But things will better. The first step is actually to get this bill passed and then, move on."

[jab232]

Let''s see. Most car companies dropped thirty percent in sales last month, and are expecting much greater drops if this bill doesn''t pass the House. Small businesses are already laying people off and some are going out of business. My own 401K dropped thousands of dollars in one day and a whole lot more since Monday. And now the House necons who trashed the regulations which would have prevented this and who profited from the rich CEO''s and Corporations who benefited while ordinary people lost jobs, homes, health care, pensions and value in their 401K''s . . . those neocons have another chance to vote this down. Let''s see, John McCain''s campaign manager got more than two million dollars from Fannie and Freddie, his adviser Carly Fiorina got a 40 million dollar parachute while laying off 18,000 workers, and seven of his most trusted folks (including Phil Gramm) were lobbyists before they came on to the campaign and will be lobbyists again (or get rich government jobs) after the campaign is over. And yet the Republicans will tell us that McCain rushed to the rescue of the bill. Leopards don''t change their spots. McCain''s spots are the spots of a "deregulate at any cost" conservative who caused all this. And if we aren''t careful the House neocons will vote this down again, and we will have the Second Republican Depression.

[david393071]

sent to house and senate:

NO BAILOUT

Since you do not understand. NO MEANS NO. NO BAILOUT.

This is what you are doing, have done, and are not doing.

We caught a bunch of crooks in the act of robbing our house, they tortured,raped and killed our spouse, raped our young daughters and sons, killed our dogs and cats, crapped on our floor, they admitted that they did this.

NOW YOU ARE TELLING US TO LET THEM GO, HELP THEM LOAD UP A TRUCK WITH OUR PROPERTY, AND GIVE THEM OUR WALLETS AND LIFE SAVINGS, ARE YOU OUT OF YOUR MINDS?

We need to have anyone dealing with this, accompliances, arrested sent to Guantanimo indefinitely, tried by Military Tribunal, just like the Treasonous Domestic Terrorists that they are, under the Patriot Act.
They accomplished what the 911 Terrorists could not do, "US Economic Crisis", "Pearl Harbor of the US Economy" according to Warren Buffet, "Global War Against Terrorism" per George Bush.

NO BAILOUT. Lynch them. especially those corporate board members that think we don''t know that they bought out Politicians and think they are above the law.


Our allies (Japanese, Germans, British, etc), think this bailout is a bailout of the Corporate Board Members that caused the US Economic Crisis. No punishment means NO CONFIDENCE IN US Political System, US Economy by our Allies.

[skidmore2000]

THE REST OF THE SORY
Sam married and we had 3 beautiful children.
We never asked for anything of the State or anybody else.
They were proud to be part of the American dream and that was enough.
Sam and his family lived a simple life and stared saving for the proverbial %u201Dold age%u201D.
Then at the age of seventy after working for the same company for 33 years Sam retired.Some times after Sam was diagnosed with having Alhzheimer.
Delia took care of him at home for some three years.
I%u2019ll not go into details, but finding a home for him was a nightmare. The worst part is that Medicare does not help pay for his care nor any Insurances
Another shocking truth is the cost of the homes for the aged, around $300.00 To $350.00 A DAY!!! That would be around $10,000.00 A MONTH! These are the people that REALY need help Not the millionaires that ran the economy to the ground. They still have thei millions and their private jets. We are forzed to choose between food on the table and medical care.
Delia Skidmore
Sam''s Wife

[tibu987]

Do you really want to reward the very people who caused this disaster by bailing them out?

This is one of the biggest boondoggles ever to be laid on the average American taxpayer who, in reality had nothing to do with causing it. They went for the carrot because it was offered them by lechers who stood to make much more money by doing so.

The "bailout" would be like rewarding the fox for killing the chickens.

[skidmore2000]

On one of your recent news programs about the economy and the crisis we are in you asked for listeners to sent your story.
Well here is my story.
Sam married and we had 3 beautiful children.
We never asked for anything of the State or anybody else.
They were proud to be part of the American dream and that was enough.
Sam and his family lived a simple life and stared saving for the proverbial %u201Dold age%u201D.
The at the age of seventy after working for the same company for 33 years Sam retired.

[tibu987]

Sure this mess is going to affect the average person but let''s keep in mind where it started with usurious
lenders wanting to make more big bucks.

Watching TV newscaster, Charles Gibson, today (09/29/08), ask a Wall Street Financial consultant this; "what caused this situation to happen."

It was never answered. The reply given by this person was that money is going to be much tighter and people will have a harder time getting credit to buy goods, houses, cars, etc. but never mentioned even a glimmer of what caused this to happen and Gibson did not question that answer.

I counter that this was all caused by avarice, usury, mismanagement, and incompetence, on Wall Street and includes Congress.

Now, it will, of course, affect the average American who had done nothing to cause this deficit. That they bought houses and then got stung by higher interest, was not the buyers fault but the fault of those who tried to milk even more money from the little guy.

Don''t believe the b-llsh-t coming from Wall Street or Washington, this was ALL their fault, and no one elses.

I oppose rewarding the avarice and mismanagement of Wall Street and the mortgage lenders and many of those in Congress and the Senate who also profit.

[staplesla]

For 2 weeks now we''ve been told daily if we don''t do something today, financial armageddon will arrive tomorrow. Every day we get by though and the stock market isn''t plummeting 2,000 points as many have suggested. We are certainly in a financial mess, and things need to be done.

However, we must be smart in how we solve this mess, or we will only be doing this all over again in 5-10 years. Our so called leaders have now added to the bill to go before the Senate today. It includes funding for foreign banks and to name just a few:

New Tax earmarks in Bailout bill

- Film and Television Productions (Sec. 502)
- Wooden Arrows designed for use by children (Sec. 503)
- 6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)

Tax earmark "extenders" in the bailout bill

- Virgin Island and Puerto Rican Rum (Section 308)
- American Samoa (Sec. 309)
- Mine Rescue Teams (Sec. 310)
- Mine Safety Equipment (Sec. 311)
- Domestic Production Activities in Puerto Rico (Sec. 312)
- Indian Tribes (Sec. 314, 315)
- Railroads (Sec. 316)
- Auto Racing Tracks (317)
- District of Columbia (Sec. 322)
- Wool Research (Sec. 325)

Take 1 minute and tell Congress to Vote NO on this bailout. Call [phone] or email them at wwww.VoteNoBailout.org. It is time our leaders work on a real plan that truly solves this financial crisis for decades to come.

[forthinvader]

This bailout is the fulfillment of the promise of 40 acres and a Mule. Repairing the White burden.

[lamb-chop2]

Thank you so much for demonstrating the "domino effect." Being a conservative independent with a doctorate (from a flyover state) I had no idea what you were talking about until I saw it right there on my TV screen. Seriously--we''re pretty stupid here in Kansas City, but not that stupid. And we''re smart enough see through the perky Katie Couric''s liberal bias. Wonder why your ratings are falling?

[gbedross]

I am opposed to the bailout bill for Wall Street. It is a scam that allows the Security of Treasury to buy Credit Default Swaps (CDS) and other financial instruments that he deems as necessary to promote financial market stability. The total CDS volume is now valued at $54.6 trillion the total derivative market as reported by the Bank of International Settlements in Switzerland was $512 trillion in 2007. It would only take a failure of a few percent of these toxic financial instruments described by Warren Buffet as %u201Cfinancial weapons of mass destruction%u201D to devour the $700 billion bailout. The bailout money from the American taxpayer will disappear into a %u201Cblack hole%u201D never to be seen.