Bailout confusion

“Hey M,
I didn’t take economics or finance in college, huge mistake. What’s going on? I can’t keep it all straight. Should we be doing this bailout? Are my hedge fund office neighbors about to go out of business? What’s the deal for poor and middle income people — is it all about to go to hell? PLEASE explain as tho I am in middle school. Hope you and J are riding this out without too many bumps. I have been too afraid to call and find out what’s happened to my retirement account.
Miss you,
E

PS – Want to have dinner when I’m in town next month? Somewhere cheap?”

Despite decades of doing advocacy work on issues like poverty, I am deeply confused about how the money machine in our country actually churns. I didn’t realize I was so confused until NPR started unveiling the shenanigans that many people engaged to make a quick buck. The easy piece of the puzzle is to point at Bush, but digging deeper, every day I am learning about new fiscal zigs and zags over recent years that should have sparked millions of advocacy email alerts firing through virtual space. Now that we’re in the kind of mess that can’t be disguised or ignored, the messages in the media are hard to sort out: conservatives like William Kristol are deeply skeptical about the buyout plan, the Presidential candidates are weaving and bobbing, and progressives like Nancy Pelosi and Barney Frank are behind a massive bailout with a pinch of pork barrel sprinkled on top.

In search of the unvarnished truth, I sent an email to one of my college friends, M, who is such a finance whiz that she and her husband retired years ago. M was the first woman on the floor of the Pacific Stock exchange not long after we finished college. She used to trudge to work in the pitch dark at 4:30 AM and then start calling to see if I wanted to go to happy hour mid afternoon when Wall Street closed up. We would be chatting on the phone and then suddenly she’d hang up, mid-sentence. “No time to say goodbye” she would later explain, unapologetically. That’s what I know about the stock market. It’s so important and chaotic that microseconds matter.

“Dear E,
I’m confused too, but hoping for the best — trying out the Pollyanna approach. Would love to see you in SF. Where are you staying? Will give you Econ 101 then with lots of wine!
Love you
M”

As I suspected, the prevailing public message from the entire disaster is confusion. It’s a well-researched phenomenon that when a situation appears to be too entrenched or overwhelming, the public has a harder time engaging a solution. Show a picture of millions of starving people and donors think, what good can my small contribution do? Show a picture of a single starving child and the donor thinks, I can help.

M used to take me to the kind of bars where stock exchange people gathered. By the time I arrived, like 5:30, happy hour would have been in full swing for some time. She once introduced me at the bar to the ABC Radio reporter who covered the stock exchange. His voice swaggered and his endearing term for everyone was “you old f—-er.” As soon as M spotted me across the crowd he boomed, “Finally she’s arrived! Come here E and buy me a beer, you old f—er.” By 7:00 he got off his bar stool, stumbled once, and then collapsed drunk on the floor. That is my enduring image of the stock market: swaggering, powerful, and then in a split second laying immobile and drunk on the dirty bar floor.