Jo Ann Emerson - Missouri's 8th Congressional District
October 4, 2008
 
Weekly Column
 
EMERSON RADIO ADDRESS: Credit Where Credit Is Due

“In Southern Missouri, credit is essential to our economy.  It assures our small businesses and manufacturers can make their payrolls and buy inventory on 60-day or 30-day credit.  It means banks can provide loans for home purchases, for college educations and to replace a broken-down truck on the farm or ranch.  Credit allows the hospital to work with you when you can’t foot your entire bill within 30 days of a serious visit.  Credit helps communities fund infrastructure improvements like water systems and roads.  In your home, credit means the cost of natural gas utilities can be averaged over the whole year instead of having to pay the full amount after each of the coldest months of the winter.

Right now the credit that performs all of these functions is frozen.  Nationally and locally, there could be dire ramifications for our factories, farms and families.  Today, it costs the bank more in interest to borrow money for a week than consumers pay them on a 30-year fixed mortgage.  They have no incentive to let go of any cash in the form of credit.  Big city banks, small town banks, it doesn’t matter.  In Britain, 19 of every 20 real estate closings is falling through because the banks aren’t showing up with the money for the mortgage.

Last time you went to the grocery store, did you pay with cash, check or credit card?  Credit card companies are raising interest rates and lowering credit limits on American consumers as you read this column.  They don’t have to tell you ahead of time.

If those systems flat-out fail, it does not just mean hard times for Wall Street, it means hard times for Main Street – even in Missouri.

We might not get paid on Friday, our job might not be there on Monday, college might have to wait a couple of years, the shop might close.

 
I’ve heard from hundreds of people in the last week who are angry that the American economy relies so much on credit.  They are absolutely right.  Part of the reason we are in a credit crisis is the fact that Americans on the whole spend more than we save.  For a wide range of reasons, American families are not immune from hard times; sometimes we default on our debts.

But among the many phone calls, a few have insisted that Congress should do nothing to alleviate the problem – including pass a plan to have the government buy $700 billion in the troubled assets clogging the credit markets – no matter how much transparency there is or how little risk there is to the taxpayer.  They insist that the market must fail in order to become strong again.

I respectfully disagree.

I have never met anyone who enjoyed living through the Great Depression. Those who say we should do nothing assume the economy will survive this crisis, and the U.S. economy will survive it in some form or another.  But the local economy in small town America may not. 

The severe ramifications of another depression would hit small town Missouri hard.  We have learned in the last two weeks that Americans’ stock investments in pensions, retirement accounts and savings could lose 40 percent of their value – a $6 Trillion cost to our economy.  We have heard that three to four million American jobs could be lost in six months.

Also, the struggles of American businesses would make them easy pickings for foreign investors in Europe, China and Russia.  During the Great Depression, at least the companies that survived stayed in American hands.  When the American economy recovers this time, the benefits of fighting our way back may not stay in the towns and counties where all of that hard work was done.

And finally, let me assure people that the money used in any rescue plan I support does not go to the Wall Street scoundrels who got us into this mess.  It goes to buy assets to free up their companies’ balance sheets.  Indirectly, maybe it helps those bad actors in the short term.  But right now, the FBI is investigating every one of them, and if they did anything illegal, if they jaywalked, I want them punished to the fullest extent of the law.  Thomas Friedman at The New York Times put it this way: “You can’t save Main Street and punish Wall Street any more than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too.”

This is an important, and complicated, issue for our congressional district.  Doing the right thing is not always easy, but fixing this problem is the right thing to do.”

 

 These are the addresses of the various Emerson offices

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