There are some things I understand about the $700 billion dollar bailout plan. The financial markets were, in fact, in a state of total chaos. The government needed to do something that would assuage the general fear in the marketplace and provide some government support to a rapidly deteriorating market place. It would hurt to shell out $700 billion to companies that should never have gotten to overleveraged and taken on so much risk, but in a lot of ways it had to be done (this last point is arguable).

With that mind, however, I can’t help but wonder who is watching Uncle Sam’s tolerance for risk and spending. We’re shelling out hundreds of billions of dollars that will be tacked on to an ever increasing pile of debt. All told we’re staring at the bottom of a $53 trillion dollar hole.

So what’s next for Uncle Sam? There’s going to be some decisions to be made. In particular, we’re facing some tough love in the near future. It’s likely we’ll have to raise taxes, cut benefits like social security and medicare, or both. No one wants to do either one of these things, but that’s the reality we face.

I came across a great clip today that ties into how I’ve been feeling lately. I haven’t been a big proponent of the bailout, and in fact I’ve been giving my representatives a call to let them know I’d prefer they not pass the estimated $700 billion dollar package to bailout financial institutions, and I understand that could mean some serious pain in the short term as well. Regardless enjoy the clip (though I could do without the cut sequences in between the cartoon, I thought it spoke well on it’s own).

With the stock market taking it’s largest 1 day hit ever, many in Washington are fearing an all out economic collapse. Personally I feel the drop is somewhat deserved. After all, weren’t most consumers involved in the housing bubble or credit crisis somehow? Aren’t most of us charging increasing amounts of money we don’t have to credit cards? Aren’t more people buying more mortgages they can’t afford? The answer to all of these is yes. Both consumers and wall street are to blame for this economic scenario.

Ultimately though there will be some type of government involvement, though how much it will cost taxpayers and how deep nationalization of the financial sector will go still remains to be seen. Lawmakers and Congressmen are all scrambling to find a solution after the first proposed bailout failed to pass by a narrow margin. I’d imagine we’ll see a modified version of the original bill or a new initiative within a week, especially given the increasing amount of pain being felt in the markets. Consumers, for their part, are desperately scrambling for their own reasons, like credit repair and saving to keep up with tightening lending standards by banks and other financial institutions.

It’s an interesting time to be alive, to be sure!

The proposed $700 billion dollar bailout failed to pass in congress today, and the markets did not take well to it. As I write this, we’re looking at a about a 500 point drop. Things may get dicey from here, I’d wager.

It may appear that I picked a rather poor time to work for myself. After all, nationally speaking, we’re facing a serious financial crisis. So far everyone goes to their job like usual and by and large no one is paying all that much attention, but I feel like we should be. Think about it. The Federal Reserve has pulled out every possible stop so far to stop the credit crisis from causing an all out collapse.

It’s final step has been a full on government funded bailout at a time when we’re already running grossly overbudget. They believe that the dangers of inflation aren’t enough to counter the fact that many financial institutions can’t get the money they need to continue operating. Investors are nervous, and I am too. The government has committed over a trillion dollars to the cause to bailout troubled financials.

The question is, what happens if that doesn’t work?