Ada vs. Wall Street
An 80-year-old grandmother who took control of her finances wonders why bankers can't do the same.
PHOTOS
What About Us?
Wall Street's problems have captured the attention of Congress, the White House and the media. But on the country's Main Streets, worried workers, struggling small business owners and cash-strapped families are wondering if anyone is paying attention to them. A look at how Americans are coping with the economic crisis.
What do Wall Street titans have in common with Ada Noda, an 80 year-old grandmother? They have all found themselves deeply in debt and desperate for a way out. From her mobile home in St. Augustine, Fla., Noda told NEWSWEEK, "My outflow was more than my intake."
According to Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and President Bush, that's pretty much what's happening to several major financial institutions in the current economic crisis. In the last month, the government has brokered three bailouts (Fannie Mae, Freddie Mac, AIG) totaling nearly $400 billion. In Washington and on Wall Street, there are dire warnings that more corporate failures are awaiting us in the months ahead. While a solution is being debated, the front-running fix is Paulson's original $700 billion bailout. Taxpayer funded, it's designed to steady the markets by strengthening ailing companies and easing the current credit crunch.
Noda's options were fewer, far less complex—and didn't include an emergency influx of cash. A child of the Depression, she learned from her parents how to live on a tight budget but had a difficult time after double-bypass surgery stopped her from working on the housekeeping staff at a local hospital. Though she'd worked all her life—into her mid-70s—her $968-a-month Social Security check couldn't cover her bills—especially the new medical debt. By 2005, She'd run up $8,000 in credit-card debt and had her car repossessed.
The following year, she had to do something that horrified her: she declared bankruptcy. She's not alone. In the 12-month period ending June 30, 2008, 934,009 American consumers filed for bankruptcy. That's 28 percent more than 727,167 bankruptcies filed in the preceding year. "It was a last resort for me," she said, but said she understands why it was necessary and feels grateful for the chance to start again, with debts forgiven. "I don't have any credit cards now, and I don't want any. I keep a ledger of what I spend and I make the bills out ahead of time because I know what to pay."
It disturbs Noda that Wall Street isn't following her path—and instead is asking for what could be the mother of all credit cards. "The corporate people that are getting all the big bucks—they should investigate them and see who's to blame before they bail out anybody," she said.
So far, 166 economists, critics from both parties and the majority of the nation (55 percent, according to a Los Angeles Times/Bloomberg poll), agree with her. "The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise," the economists' letter to Congress said. Former labor secretary Robert Reich argued "the process should resemble Chapter 11 under bankruptcy." Even GOP stalwart Newt Gingrich has been making the rounds to assail the bailout, calling it a power grab that is "outside the law," and one that will lead to large-scale corruption.
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Member Comments
Posted By: cani77 @ 10/03/2008 9:58:52 PM
Comment: The Bush Depression
In a few weeks we will make a choice that will decide our future.
I follow an economist named Bob Proctor. He has called the top and bottom of every market crash since the 70s correctly.
Also, he perfectly predicted the current real estate market meltdown and the picture he paints about what will happen in the next couple years
is terrifying.He thinks it will be worse then the great depression.
The banks in the U.S. are going under one after the other. Countrywide the largest morgage bank in the world,Bear Stearns, Lehman Brothers and Merrill Lynch which are 3 out of the top 5 wall street firms. Also, Fanny and Freddy Mae which hold 50 percent of the home loans in the United States.
The government took them over because they are essentially bankrupt.If they didn't the entire financially system would virtually shut down, the stock market would crash and we would suffer beyond what any of us have seen before.
McCain just like Bush " doesn't understand the economy".
That not just my opinion its his own words. Not only does he not understand how to fix it but he does not understand exactly what is broken.
It is no surprise that he doesn't. The people that make up these securities use complex mathematical models very few people understand.
Bush and McCain both can take the credit for this mess since they helped deregulate the laws that were protecting us.
Bush's economic advisor Phil Graham wrote the deregulation bill that allowed banks to take huge risks with all of our future.
Now, Phil Graham is the head of McCain's economic policy.He is also McCain's choice for the next secretary of the treasury.
No one in this country can afford for that to happen. The last time Bush met with his economic advisors was in March. He either didn't care or didn't realize that anything was wrong. Phil Graham had the guts to say that we are in a mental recession after he helped create the worst economy meltdown in our lifetime.
It will take the best and brightest minds in the world to get us out of this nightmare. As bad as Bush has done, McCain would be
even more destructive because things are in much worse shape. The next president will not inherit a surplus like Bush did but a tanking economy and a 11,600,000,000,000 (trillion) dollars deficit.Bush created a national debt larger then the first 42 presidents combined
If you do what you have always done then you will get what you have always got.
When it comes to policy Bush and McCain are the same 90 percent of the time.
So why isnt obama 25 points ahead
The chairman of McCains campaign recently said that people don't vote on issues they vote on a personality composite. Which means he is trying to sell you personality instead of results.
Let's teach him we are smarter than that .
31 states are voting now, dont wait
Elect Obama Biden 2008
Check out this video of sarah palins interview before you vote
http://www.youtube.com/watch?v=r36Xc0GG4i
Posted By: samspolitics @ 10/03/2008 9:37:57 PM
Comment: Cannot really blame it all on Wall Street. The kids working there today grew up in a leveraged and greedy world. Credit cards at home, loans at college, leveraged purchases of cars, houses, tVs etc as young adults. We expected them to change when they took jobs at Lehman Brothers or Merrill Lynch. Come, come. Wall Street is us, made in the image of Main Street.
Posted By: samspolitics @ 10/03/2008 9:34:27 PM
Comment: The "kids" on Wall Street grew up in leveraged households (all on credit cards), got leveraged college degrees (big time loans) and started adult life leveraging cards, houses and TVs. American life is leveraged -- and greedy. Why did we expect them to change when the became officers at Lehman Brothers or Merrill Lynch? They are us. You have to blame us all.
Samspolitics