Bleeding Through Bandaids

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This morning, the Dow Jones went under 10000 for the first time since 2004. Last week Congress passed the Bailout/Socialism Bill of 2008 that was supposed to fix things, yet the headline today reads: Dow Plunges on Fears of Credit Crisis Spreading. What happened?

All through the last few weeks, I registered my displeasure with both my local federal congressmen as well as both party candidates. Congressman Jon Porter (R-NV), who even voted FOR the first House bill, was the only one who responded, and he justified his vote. I still believe and I think the market backs me up that the bill did nothing except maybe make things worse. Rush Limbaugh pointed out last week that no matter what the House and Senate did, the DOW went down after every vote. When the first House bill failed, it fell 400 points (down 700 total for the day, but down 400 after the bill didn’t pass), and then when the Senate passed it’s bill, the DOW fell about 280 points. Now it’s down another 400 this morning after they railroaded it through against our wishes. Good job President Bush.

It’s an election year, and politicians want to look like they’re doing something. The trouble is that they’re putting bandaids on a compound fracture with multiple contusions and lacerations and then gaping in awe when it bleeds through. The best policy would have been to do absolutely nothing, but in their haste to take credit for fixing things, they passed a bill, and now things are worse. Fortunately, I’m young enough that I’m going to ride it out and leave my money where it is, despite having lost 25% this year alone.

If a politician really wanted to make waves and win an election, this crisis still presents a golden opportunity. If I were John McCain, I would get out there today and say I’d realized we made a mistake and pledge to NEVER let the government interfere with the market again. Government interference caused this mess, and more interpolation will do nothing to fix it. It will do the same thing it did before- cause a mess. Insanity is doing the same thing twice and expecting different results.

I admonish politicians en masse like I did before. If and only if you do anything, CUT TAXES. Decreased taxes would allow a private company like JP Morgan Chase to buy out a failing company like Washington Mutual instead of putting the bill on taxpayers. Businesses know more than lawyers, with which the congress is largely populated, about making successful businesses. This bailout bill was never capable of helping the average American, and anyone who tells you anything differently is selling something.

Disclaimer: the author has investment and banking products with both Chase and WaMu.