I wouldn’t be surprised if you haven’t. It’s very easy and common to have a disconnect from the happenings in the world anymore. So even when we may have been witnessing the biggest financial catastrophe (or the greatest financial bet) in the last one hundred years most of you probably didn’t bat an eyelash. I think that’s a problem.

Yesterday the House of Representatives voted down the financial bail out bill. Some 40% of Democrats voted against the bill as well as the majority of Republicans. The bill failed by twelve votes and the market reacted with the biggest single day point drop, for the DOW, in history. That’s not in the last decade or two, that’s ever. This isn’t the biggest problem though, the biggest problem is that credit may just completely freeze up. Anyone who needs a loan for anything (a house, a car, payroll, to order inventory) may be out of luck. Our credit based economy could very soon come to a halt. Some people have even said that your ATM or credit card may not work anymore. That one is a bit of a stretch but I think it’s worth it to check the performance of your bank’s stock. ING has dropped from $48 to $20 in the last six months so I’ve seriously considered moving my money.

There is a really good side to this. The bet that a lot of politicians in the House are betting on is that doing nothing is doing the most to fix this problem. After all, why should we prop up failing businesses? Maybe we should let those businesses fail, even if it hits us hard in a lot of ways, so that better businesses can take their place. This may even be the best way to keep our market free while giving powerful firms a very good reason not to partake in the shady trading practices that helped get us here in the first place. The bill was going to include oversight on this kind of thing but wouldn’t it be nice if we instead told the market that if they screw up it’s completely on their shoulders? It’s like teaching a kid responsibility. You don’t help them learn this valuable skill by fixing all the problems they create for themselves.

Of course, there are very good reasons for propping these businesses up like I have mentioned already. In the end this all seems like a wild guess at which choice will help the most. No one is crunching numbers to find out and it wouldn’t really be helpful as economics is as much a social phenomenon as it is a mathematical phenomenon. Personally, I lean to the “let the crap fall out” side but I’m regularly going back and forth on the issue. The only thing I know for sure is that you should all be paying attention. As much as we all like to think we live in a vacuum, we really don’t. We elect the people who decide these things and their decisions could decide whether we enter another Great Depression or not. If we do, it’s not the politicians we should blame, it’s the people. We should blame the people who have become lazy and bought into the idea that nothing we do makes a difference. We should blame the people that take the success of their nation for granted and choose to forgo the voting rights that others in the past were willing to die for, whether they were soldiers or just minorities that wanted a voice. In short, inform yourself.