Sep 25, 2008 10:51 pm US/Central
What Will Happen If There Is No Bailout?
CHICAGO (CBS) ―
You might think Wall Street CEOs dug their own graves, or that bailing out a major industry is at odds with the fundamentals of American economics. But CBS 2's Vince Gerasole reports on what would happen if there was no government bailout.
Working long hours in the salon she opened two years ago, small businesswoman Daniele Sulikowski is as self-sufficient and Main Street as it gets.
"I am worried about paying the rent here," Daniele said. "I see myself expanding in the next five years, so it's scary with what economically is going on."
If Daniele can manage her business, why then should the government rescue the big guys who can't?
"If we don't do anything to arrest our current problem, a very bad economy gets worse," said Prof. David Stowell, Northwestern University.
Believe it or not - a lot of this is connected psychologically to the mindset of the financial institutions at the top. If they're concerned about the economy, they are less likely to lend money to each other - which means they have less money to grant credit and loans to businesses like Daniele's hoping to expand, maybe hire an assistant - and the results according to Northwestern's David Stowell are widespread.
"There's a cascading system of tragedies that impacts each of us," Prof. Stowell said.
If Daniele wants to buy a house, an uneasy economy means interest rates are higher, so maybe she can't.
"Ultimately we have no access to credit and it hurts us in our pocketbook and we lose jobs," Stowell said.
Daniele might also put off purchasing her new car - and with so many cars on the lot - the manufacturers stop making as many and lay people off.
"People at corporations big and small stop spending money, stop employing people and they make a bad situation worse," Stowell said.
This all could mean fewer people come into her salon, and that's a hair-raising proposition from Wall Street to Main Street.
"Whether you are a big business person or a small business person, you are not going to be able to know what's going to happen and that's a scary proposition," Daniele said.
This is a very simple outline - but the point here is multiply it by every American and it adds up to a situation that could get worse if it isn't addressed, according to experts. Even conservatives who find it against what they've believed in for years.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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