OK, SLOWDOWN AND DON'T FORGET TO BREATHE

The founders created the three branches of government to check and balance the others. They went even further bifurcating the legislative branch into a quick response arm with small constituencies and short terms of office and another arm with longer terms and larger constituencies that was designed to be more deliberative. What we have seen by the Bush administraion this week is an effort to rush the Senate into taking actions against their design. It is irresponsible to violate the basic tenets of the Senate to be intimimidated into enacting a 700 billion dollar funding bill that would turn the American taxpayers in the position of a lender that no credible bank or other lending institution would accept. It's time to apply the brakes, take a breath and work through the serious issue of saving the economy.

The success or failure of any plan to bail out the market is going to depend on its success at stemming the tide of lowering housing prices. Nothing in the proposal even addresses this critical aspect of the economic downturn. Declining house prices, the root of the problem, is to put it simply the result of too many people who cannot afford to live in the homes they are in. Over extended borrowers and their lenders made admittedly as bad bets that housing prices would continue to rise allowing almost unlimited refinancing and debt payoff and reaccumulation in a never-ending spiral. As in all Ponzi schemes, it doesn't take much for the whole house-of-cards to come tumbling down.

If banks and other lenders feel that housing prices will continue to fall, they will be reluctant to make loans even if they have the money. This credit crisis is not addressed in the current proposal. The Senate however is in overdrive in a rush to do something, anything that will appear that they are engaged.

STOP. BREATHE. THINK IT THROUGH. This may well be the most important legislative action of your careers. It is not a time to be rushed into passing a bailout that will only make matters worse.

The Edge