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So, as you may or may not have heard (and if you haven’t, where the fuck have you been?) that we’re on the verge of ::gasp:: a complete and utter economic unraveling. Well, that may or may not be true.

Allow me to introduce myself…kind of. I’m a chick who works in the exciting (until a few weeks ago, it was “boring”) field of financial broadcast news. I majored in magazine journalism and have taken one, yes ONE, economic class in my life. So, really, I am your Everywoman in the financial world. I know how this “economic crisis” is affecting average people in my age bracket (that’d be early to mid-20′s) and what’s confusing them. I’m going to do my best to explain (complete with unsolicited opinion!) what will be happening to YOU, not your parents because if I have to explain anything more complicated than the ban on shortselling, I can’t. So. Here we go.

First of all, no. You’re not going to lose all your money. And neither are your families. Unless they worked for Lehman Brothers, in which case, you and your loved ones probably have a whole lot of other issues to deal with.

What’s going on RIGHT NOW in the day-to-day markets is panic. Pure, sheer panic. There is actually really no definite need to sell all your stocks and stick your money under the mattress. You must think LONG-TERM investments. You can not make a quick dollar in this market, so please for the love of all that’s holy, DON’T TRY. That said, please don’t just horde your cash. I spoke to a Global Markets Strategist from J.P. Morgan today who made a really good point. If people horde their cash, everything is going to freeze up essentially, and we won’t move forward. We need money circulating to help free up the credit markets. Like Smokey says, “Only you can prevent [an economic crisis].” (Okay, allow me a bit of poetic license here.)

Yes, the banks are in trouble. They need to do something called “raising capital.” This means talking to hedge funds (they’re pretty evil. No transparency and they have the ability to drive stock prices higher and lower. Hence, the ban on short selling. When you short a stock, you basically bet for it to go down. Hedge funds have traders and investors who, if they want the stock to go down, will force it down. There’s a big lack of regulation on Wall St. (oh, shock!) and that is sort of what has gotten us into this anyway) or private investors to inject liquidity (liquidity is jargon for money, but how dirty does that sound?!) into the banks.  If the bank in question can raise capital, they’re okay and they won’t need to be acquired or bailed out. Now, we also have a lovely institution called the Federal Reserve who loans government-backed money out to the banks. They have an interest rate (currently at 2%) at which the banks have to pay back the money; much like we do with our credit cards. The Federal Reserve has been buying bank debt (so we essentially pay THEM when we pay back debts) to help financial institutions stay afloat.

Are you still with me? Great. I wish I could promise you cookies at the end of it, but umm…I can’t.

Alright. So, there’s the banking system/Federal Reserve in a reeeeeally tiny nutshell.  The reason the banks need this “bailing out” is because predatory banks decided to lend money to people they KNEW couldn’t pay back their money, mainly on mortgages.  This is where it gets touchy with me. Yes, the banks were wrong to lend money to people who couldn’t pay back their loans. How did they know they couldn’t, you ask? They had no assets to their names and no sort of way to prove they could pay back loans, but the banks loaned the money anyway. If you have no assets to your name, MAYBE you shouldn’t try and buy a house. I probably could have gotten a mortgage, actually. I have a decent paying job and good credit. But, I know better than to try and buy a house at this point in my life. Of course, it’s tempting, but really, if you have to create a different grade of mortgage called “subprime” to classify these kinds of loans, don’t you think it might not be a good idea to lend these people money? I’m talking to you, Bear Stearns.

Now, since Wall St. banks have leant out all this money and aren’t being paid back, it’s OBVIOUSLY up to the government to bail them out. I OBVIOUSLY disagree. It’s not my, or my fellow citzens’, fault the heads of banks and hedge funds needed those Ducati bikes and millions of dollars in bonuses each year. Greed got the best of them. I’m also not completely placing blame on the banks, however. I also blame the people who borrowed the money in the first place. Hell, if I had known there was a possibility of a government-funded bailout, I would have maxed out at least two credit cards. My ass would have looked great in a brand new pair of True Religion jeans. But alas, I’m responsible and my ass is clad currently in H&M leggings and a t-shirt dress from a TJ-Maxx-type department store. It’s called “living within your means.” Both Wall Street AND Main Street should have tried it. Maybe the rest of the taxpayers wouldn’t be faced with $700B added on to the national deficit, which now stands to be at just over one TRILLION dollars.

Now, on to the bailout bill.

Wtf, Senate, WTF. The House didn’t pass your bill. Wah-wah. They reflect the voices of the taxpayers more than you do and CLEARLY the taxpayers are saying, “please, no, don’t pass this bill, seriously guys…no, guys…seriously here!” So, the Senate sent a message to the HoR, (please read this in a Cartman voice, thanks) ”Fuck you guys, we’ll do what we want!” And! Not only are they going to do what they want, they’re going to add tax BREAKS to the bill. Thanks for the pork guys, but I’m Jewish. I don’t dig on swine.

I’m asking the HoR to NOT pass this bill tomorrow for two reasons: 1. Send the message to Wall St. that we won’t be beholden to their every whim. Have another 777 point sell-off tomorrow. The only way that REALLY impacts me is that I’ll have to work another 14 hour day. So, thanks for that in advance. 2. Get rid of the pork. I’m talking $1.7 billion in tax breaks. Manufacturers of kids’ wooden arrows got a tax break of $6m.  Auto-racing tracks got a $128 million dollar break. Oh, and they awarded $223 million package of tax benefits for fishermen and others affected by the 1989 Exxon Valdez oil spill. Now, don’t get me wrong, that in a word, sucked. However, do we REALLY have to deal with this as we’re on the verge of potential economic ruin?! This happened 20 YEARS AGO. Seriously. Shouldn’t we be using that $1.7 billion dollars as a drop in the $700 billion bucket?

So, take that shit out and get back to me.

After a little explanation and a lot of opinion I leave you with this. Yes, your taxes are going to go up. Yes, a low rate credit card will be a bit harder to get. Yes, your 401(k) is probably down. But, if you’re in it for the long haul (which you should be in your 20′s, you got a good 40+ years to retirement, don’t kid yourself), you should be fine. Stick it out. Save some money. Check your investments. I have mutual funds and 91% of them are down for the year. Know where your money is at all times. You can keep your money in the banks. They’re trying to raise the FDIC limit (FDIC insures your money in banks) on personal deposits from $100k to $250k. So, your money should be safe.  Also, thank your lucky stars (I’m guessing most of) you live in the US. Compared to a lot of other G7 countries, we actually aren’t doing TOO badly. Like the J.P. Morgan Global Strategist said, “I don’t believe in decoupling. When the US catches a cold, the whole world suffers more.” Decoupling (again, with the dirty words!) is the idea that economic and market ties between the US and other countries are falling apart. Things are not falling apart. Not yet, at least.

As a sidenote, if you’re in your mid 20′s to late 30′s and have more than $250k in the bank and you’re single and looking for a nice Jewish girl, call me.