Illinois Governor Suspends All State Business With Bank Of America!, page 3

Originally posted by Anonymous ATS
let me get this straight....they want boa (i hate them for other reasons) to take federal bailout mone "required" from the practice of making bad loans....and give it to a company going out of buisness with no real hope for repayment.....am i missing something other than a vote buying scheme?

------Aaron

It's actually a lot more complicated than that. Republic is failing not necessarily because they can't compete, but because potential customers can't get lines of credit either.

You are aware that credit has essentially "dried up" all across the country, and that banks haven't really been lending ANY money out except to those who have the tippy-top scores--and even they have had to take some extreme measures and crappy interest rates?

See, here's the problem:

Our economy is (supposedly) based on Supply and Demand. Over the last 30 years supply (productivity) has steadily increased. However, in the late 70's and early 80's wages (demand) began to stagnate. The banks, with Reagan as their crusader, essentially lobbied and conspired to use debt (credit) as a replacement for wages in keeping up demand.

See, in order for our economy to work, people have to have enough money to buy things. If they don't, there's no demand for products and services, and thus no need for workers to provide said products and services, and then you lay those folks off, and then there's less people with money--it's a steep downward spiral.

Debt (credit) has replaced actual wealth (wages) in keeping up demand. But debt can only go so far, and unlike wages needs to be paid back. As the job market has contracted and the recession began in earnest, fewer and fewer people have enough wages to buy things outright. The contraction in housing prices (homes being most Americans' primary source of wealth or "equity") has further eroded their ability to purchase the things they want and need outright, AND their ability to borrow (take on debt) to make up for lost or lowered wages. With the credit crash banks aren't really lending AT ALL. (I work for a recruiting firm and the number of out-of-work bankers and loan officers I deal with is STAGGERING, as are some of the horror stories leading to their layoffs).

So. Nobody has money from wages, and now credit as an avenue to purchase goods and services has also shut down.

Who, precisely, is supposed to buy Republic's products? Home improvements are expensive. Most folks need credit to be able to purchase products. Republic, losing customers (not necessarily through any fault of their own) turns to BoA to get credit moving so they can stay in business and ride this out. BoA refuses, despite the fact the bailout money they were given was specifically meant to be used for this purpose.

That's the point, you see--EVERYONE (pretty much) is in serious trouble. Companies all across the nation, focusing their efforts on "the next Quarter" and not on long-term viability, have been running on credit for YEARS. All the bills are coming due, and companies don't have the money to pay, because their potential customers lack the liquid income necessary to buy products and services--so, just like their employees (or former employees) they face the same credit-related problems.

Demand is waning.

Supply will soon be far behind.

Cars are sitting on dealers' lots because few can afford to buy them. High-end electronics are seeing slashed prices in an effort to lure those with just enough cash or credit to purchase. Home improvements are going unfinished. New construction is almost nonexistant (the stories I hear from out-of-work home-builders is heartbreaking). Professional tradesmen such as electricians, concrete workers, carpenters, etc. are on unemployment lines.

Is it any wonder Republic, who makes and sells home improvement products, is failing?

And they're not alone. Stores are shutting down all across the country by the hundreds.

If this fall isn't arrested soon with a REAL stimulus package that includes living wages, health care reform and tax breaks to the right people, then we're in for the worst depression anyone has seen since the 1930s.

EDIT: For the record, I AM a Democrat and I voted for Blagojevich twice (because his opponents were every bit as bad as he is) but he's made his own prison cot here. He's going to jail and he's going to end up staying there a long time, and he deserves everything he gets. The timing may be suspect to some, but some might just as rightly suspect the timing of his support for these workers.

EDIT 2: As an Illinois native and life-long resident I can sincerely say that Illinois politics do, indeed, suck.

Except for Obama. One bright star in a sea of lies and deceit.

[edit on 12/9/2008 by The Nighthawk]

[edit on 12/9/2008 by The Nighthawk]