We need something.

I may not have liked the proposed bailout package but to vote it down and not have a back-up plan is like going to war and not having an exit strategy. Nobody wins. The down vote today cost the taxpayers more in market losses, though unrealized for the smart ones, than the damn "bailout" would cost. I don't think the general public understands 1) how expensive the plan truly will turn out to be (less than $750 bil.) and 2) the repercussions for doing nothing. It has been a long time since our country has had a financial system crisis like this. I don't believe these people who are calling on their Reps to vote against these "rescue" plans realize that helping the stupid firms (I emphasize stupid because they did screw up big) will help them. Most people can't pay cash for their homes, college tution, cars, small business ventures, etc. If we don't help the banks spending will dry up and the economy will shrink significantly more than it is already going to. I fully believe that if we just let the free market work itself out, we will see double digit unemployment. People think it hurts now and we are only at 6.1%! Passing this bill or something similar is necessary to stop the momentum of a bad situation getting worse. The whole system is so interconnected that now each failure inevitably leads to another. Putting the money into the system won't prevent all future losses but it will at least give us a chance to stabilize for the short-term (6 months) and possibly start growing again later next year. I just don't know how this fragile system will fair if everyone runs on all the banks.

Luckily, I believe that Congress will get together on Thursday and hopefully pass some smaller, potentially less expensive measures to help shore things up on a piecemeal basis. They can start with an idea I've heard about increasing FDIC insurance caps to at least $200k per person. This will help offset the huge problem of money flowing out of banks and into T-bills and money market funds. We need banks to make the system work and banks need deposits/capital to operate. Since the government now guarantees money market funds, any person or business over the FDIC limit who has cash in a poor performing bank will pull out their cash and put it in a money market fund. And justifiably so. So increasing the limit will certainly help to some degree. Probably most important of all, if banks don't have the money they need to make mortgage loans than prices of homes will continue to drop and our economy will absolutely not turn around until housing prices stabilize. It is a tall order but it is possible to get out of this mess without falling into recession of greater than a year but it will take smart and bold moves by Congress at this point to make it happen. The Fed and Treasury have done pretty much all they can without a new law being passed.