Time Magazine has an interesting article about Why Americans aren’t Buying the Bailout.   The article basically says that Bernenke and crew hgaven’t found the language to properly explain why the bailout’s inportant and needs our support.  The argument basically comes down to a summary of Chip & Dan Heath’s Made To Stick principals ( although this book was not acknowledged, which is a shame).  The premise here is that the Bailout has a Marketing problem.

However, I think there is something more serious at play here- after eight years of the Bush Presidency, the public, and dare I say, the congress, has listened to and followed the advice of the president, only to feel like they have been sold a used car that turns out to be a lemon afterwards.  The President has called “Wolf!” too many times, and now, when there is a serious problem, the public simply does not believe him anymore.  There is a serious credibility gap, formed by people seeing Bush’s oil company cronies doing well, and reaping the benefits of a great market, and now wanting protections as the market heads south.  And they are saying “No More” , which carries much more weight in an election year than it ever does in less volatile election cycles.

The Republicans are masters of the talking points and sound bites, but it means when there is a problem that is complex and nuance becomes important, no one listens.  They have trained the populous to respond to gut calls of simple yes/no answers on sound bites for years, and now it is backfiring on them when nuance counts.

The financial meltdown and freezing of credit markets may not get the help it deserves because we have simply ignored teaching of basic economic principals to every child in America- we save that for college and for business majors  (on the whole).  It’s not easy to explain two semesters worth of ecomonics in a three minute interview on CNN- that horse is out of the barn.  And therefore, Americans may not understand what is happening, and therefore are unwilling to back any old plan anymore- that’s already gotten us into a lousy war and into a financial downturn- why should we trust our government this time?

I think some version of the bailout has to happen- but I think it is best handled by using the Court system to reform mortgages to try to keep people in their homes and off the streets.   Failure to help in that regard will only lead to a  social welfare crisis.  But I am not sure the Government should be buying the mortgage backed securities that are now undervalued or worthless- those financial instruments are bad news- we have to unbundle the loans and administer financial and legal justice.  Use the money to form temporary “Real Estate/Bankruptcy Courts” to help people sort through their loan and housing issues, and mediate the contracts with the banks involved.  That way, everyone will come out of this closer to whole than we might otherwise hope.

Too many people in the financial sector have been living high on the hog for too long- the fact that Citibank is about to spend $400 million to get the new Yankees Stadium named Citi park for 20 years (and I am sure secure a prime sky box for that period as well)  is just one example of bank money being used for something other than supporting good business practices.  Yes, that is a marketing expense, but does a bank really need $400 million worth of marketing to stay in business?  I think this is ego, not a good business decision.

I think Wall Street and everyone working there has gotten a wake up call.

I think the corporate excess will be less of a problem for a while, if CEO salaries are tied into the bail out provisions.  This problem is more complex than “greedy wall street bankers” and “housing speculators” and the gross characterizations that are being played for the cameras.

But the long term solution here is to make sure every American understands economics and what’s at play here, even if it means we have to resurrect H. Ross Perot and his charts and take Americans to Economics 101 in a series of prime time lectures for a week or two, and then get the problem solved, for now, and into the future.