Taxpayers should expect results, but not soon
Taxpayers should expect results, but not soon

By Don Mecoy

Published: September 28, 2008

The government's $700 billion solution will not provide instant relief from economic turmoil for consumers, but U.S. taxpayers could ultimately benefit from the Wall Street rescue.

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In fact, the government's plan could be profitable.

"There's a possibility that there's enough hidden value that if the government bailout plan contains a systematic vehicle to hold and trade this paper as time goes on, then it could be less of an impact to the taxpayers — or it could be a profit opportunity,” said Bruce Jones, managing director at ClearRidge Capital in Tulsa.

Accounting rules have forced corporations to write down the value of many of their assets based on their current prices, and those prices have been in a free fall as credit markets soured.

The government could overpay and end up ahead by holding the assets until market calm is restored, Jones said.

Vince Orza, dean of the Meinders School of Business at Oklahoma City University, said, "There's no reason to think anybody in Congress knows the first thing about this,” Orza said. "These are not people who have any great economic genius. These are just elected officials. In many cases they know as little or less about it than the average guy reading the paper everyday.”

"Without some kind of intervention this really could spiral out of control,” Orza said.

John Burns, chief executive officer of Burns Advisory Group in Oklahoma City, said the economy could survive without the government stepping in, but that infusion of cash will "start the healing process.”

"If we do see a recession, it probably wouldn't be as deep,” Burns said.

Recent data reflects the weakening economy. Demand for manufactured goods fell last month while sales of new homes were at their lowest level in 17 years. New unemployment filings haven't been higher since the period just after the 2001 terror attacks.

"The capitalistic system does work,” Orza said. "It's occasionally painful and that's what we're seeing right now.”

Sue Lynn Sasser, University of Central Oklahoma economics professor, said many consumers don't recognize the bailout benefits and are overwhelmed by the economic and market confusion and the amount of money the government is considering investing. Some wonder why the money isn't going to individuals who lost homes or jobs due to the swings.

"It's couched so much as a bailout of Wall Street without recognizing the role of interdependence in the financial system,” Sasser said. "It goes way beyond just some Wall Street mess.”

Losses in investments, bank failures and the general alarm among business and political leaders has shaken consumers, Sasser said, which could be dangerous.

"The entire economy could crash just based on fear that people have,” she said. "If you lose faith in the economy and faith in the government and faith in the system, then we really don't have anything left.”

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