With the House Republicans hunkering down, I felt it was necessary to finally address this bailout.

1. This Economic recession is a problem hurting Wall Street, not "main street".

So very, very wrong. This has been covered a lot, but this problem of Wall Street does not only impact our stockmarket, but also impacts the credit made available to everyone. That means if the situation continues not only would companies not be able to expand or even make the payroll*, but those of us who need to take out loans in order to afford college/grad school will feel a heavier pinch in the form of increased interest rates and less negotiable repayment times. This doesn't even cover the drops in 401Ks that most of our parents/older siblings will be experiencing as a result of the stock market.

*Yes, this is how a lot of companies expand and make payroll, by borrowing money. If you take away their abilities to do so, you'll send a lot of people to the unemploymetn line.

The worst case scenario right now is that banks continue to fail, as they have been doing all over the world. At that point, credit and savings will be scarce and the purchasing power of consumers and corporations will fall, as they're liable to do anyways. Essentially, failure to do something will lead to a drastic decrease in purchasing power, capital flow and credit - which leads to a slower market and a slower economy.

As this Business Week article puts it:

"The ripple effects of the week that shook Wall Street are now being painfully absorbed by nonfinancial companies across the nation, from carmakers to casinos. "Tightening financial conditions have expanded to reach nearly all sectors," says Diane Vazza, managing director of global fixed income research at Standard & Poor's, which, like BusinessWeek, is owned by The McGraw-Hill Companies (MHP). "Screaming headlines about the financial sector might give some the misleading impression that nonfinancials are mercifully out of the line of fire. Nothing could be further from the truth. The heat will eventually spread.

Even the most iconic Main Street brands are not immune. Franchisees of McDonald's (MCD) were told Sept. 19 that Bank of America (BAC) could not provide any new loans to pay for the equipment and remodeling needed for the rollout of new coffee bars. "As of now, [Bank of America] is dependent on repayments to get additional funding capacity," said an internal memo obtained by BusinessWeek. "The bills are coming due, so the franchisees are turning to the banks," says Richard Adams, a consultant who works with 300 McDonald's franchisees. "But the banks are having their own problems."

So yes folks, this is important in terms of your paycheck, your parents' retirement savings and on your ability to get good loans in the future. Look, Europe is already feeling the Credit crunch, and soon Asia will feel it as well. It will only be a matter of time before this hits America. Oh, and your savings - they aren't that heavily insured.

2. The House plan is a viable alternative

There are few words I have about how dumb the alternative proposal is. Yes, the market is good more often than not, but this situation is not the time to test the strength of the market and the integrity of its operators. The House Republican proposoal would depend on insuring bad loans rather than the government purchasing them.

This fails on a number of levels: 1) It fails to establish the safety net value needed to drive the value for mortgages up.

Essentially, what the Paulson plan wants to do is to buy bad mortgages in order to set a safety net for the market. Once the market for these bottom-level mortgages are established, the rest of the market is then free to adjust itself to the new prices. This would lead to easier loans to purchase new houses, which would hopefully lead to a market recovery. When the market does recover, the money invested in those bad mortgages will also increase, leading to the taxpayers getting paid back for their investment.

What happens with the House plan is that no bottom line is established. Rather, the government simply gives insurance for when those bad mortgages inevitably fail. With no stable market established, the credit crunch will continue. This means that no actual market recovery happens.

2) It requires already capital-starved companies to spend money to keep from losing money

I must ask, with what? They are already hurting for money, so how can these banks, investment firms and other companies insure their worst mortgages with money they lack. The reason why this bailout is needed is because the market lacks capital or credit. Requiring a further injection of capital in order to solve this problem is just an example of nonsensical clinging to already debunked beliefs.

3) It once again falls under the assumption that deregulation is good

This plan provides for no oversight, and it won't destroy the culture of risk-taking that has taken over on Wall Street. This isn't a plan, it's an extension to the same Grammsian economic philosophy that got us into this mess in the first place. The markets have failed because our regulation network has become patchwork and our government has become too subsidy-happy. This won't solve that problem

3. We can expect market recovery upon impact of the plan

Unfortunately, this is also false. As I cited above, the consumer spending will likely to continue to fall for at least a few more months, and the revival of economic growth depends on the ability of the Credit Markets and the housing markets to recover. This plan doesn't guarantee immediate recovery, but it will curb the excesses of this market.

As explained here:

The biggest challenge to the economy remains the tight credit markets, which squeezed shut even more Friday after the collapse of Washington Mutual (WaMu), the largest bank to fail in US history. That left economists buzzing about an economic downturn that might be more severe than anything since the Great Depression of the 1930s – especially if Congress punted on the $700 billion rescue plan.

In the absence of a rescue deal for banks and other financial institutions, "we were going to have an extended recession with ... the potential for a depression," says Eugenio Aleman, an economist at Wells Fargo Banks in Minneapolis. "Even with the passage of the rescue plan, the slowdown is going to be long."

So anyone expecting immediate impacts are in the wrong business, and this current situation will doubtlessly affect the next president, but this plan is a step in the right direction. Right now, global markets have been freefalling and 4 strong European markets are on the brink, with banks in Great Britain, Denmark and Iceland already federalized. The impacts of this recession might be felt for a long time if the House doesn't step off its ideological high horse and get something done.

4. This bailout will impact the federal budget

One of these days, I think I'll write a book called 100 things you think you know but actually don't. Top among these would be "How Congress Works"* and the second would be "how budget works."

*it deals a lot with committees and compromise and very little with actual debate on the floor

This bailout will not have a giant impact on the budget of the next presidency, despite Jim Lehr's efforts to make it seem so. As explained here:

So, why doesn’t a $700 billion program mean $700 billion less for a new president to spend? The answer lies in accounting conventions that are often misunderstood – and, critics would add, not well suited to the nation’s current financial crisis.

“People will find it hard to believe, but the bailout will have very little impact on the budget or the deficit,” says Peter Morici, a business professor at the University of Maryland and the former chief economist at the US International Grade Commission.

What the government is going to do is to sell bonds, get cash and use that cash to buy mortgage-backed bonds originally created by the banks. These bonds will be purchased at a discount and the government will hold them to maturity, says Mr. Morici.

“If the government loses any money, it will be because it overpaid for the bonds – and in any case, the budgetary impact is not large,” he adds. “It will be stretched out over several years.

So yes, while this will contribute quite a bit to the deficit, it won't have all that much impact on the budget. Our bonds supply will drain, but our budget will remain largely constant. Make no mistake, a lot of this bill will be footed by the taxpayers, but it's just an unfortunate legacy left to us by the late 1990s.