As I’m sure you’re all aware, the House of Representatives voted down the Emergency Economic Stabilization Act of 2008 (H.R. 3997) today.

People have no idea how screwed we are if the EESA 2008 doesn’t get passed.

“Bailout” was the worst marketing technique anyone could have chosen. The plan is not a taxpayer bailout of Wall Street fat-cats.

The plan should be considered as a long-term investment by the U.S. government … like the sovereign wealth funds from China and Dubai that are buying up so much stuff right now. 80-90% of the mortgages in the currently illiquid MBS’s are good. These mortgages will get paid. The MBS’s aren’t insolvent; they’re not necessarily bad investments, they’re just excessively illiquid right now.

If the government holds these securities to maturity or until the economy stabilizes, there is a very good chance that as a nation, we may actually realize a profit on most of these securities.

Currently, mark-to-market accounting rules mean that if a few of these securities are sold at deep discounts, then everyone else must write-down their values to the current market price … the problem is that right now, there really is no market, which makes it even more difficult.

It’s like having a pocket full of $500.00 bills. Most places can’t make change on them, so if you’re desperate for cash you can spend, you may be forced to sell a $500.00 for $250 in small bills. The way the current accounting rules are, then all of the $500.00 bills you own now have to be valued on the books at $250.00.

Now, if you’re sitting on a stack of $500.00 that you can’t really spend, and have just a few $20.00 bills, you might be hesitant to lend out the $20.00 bills because you don’t know when you’ll be able to realize the true value of the $500.00 bills.

This is the equivalent of commercial credit drying up.

Trading in commercial paper (which funds almost every company’s day-to-day activities) came to a near standstill last week. It will be interesting to see what happens when a business’s lines-of-credit start to dry up, and they can’t make payroll.

Please call or write your Congressional Representatives, and urge him/her to vote FOR the EESA 2008 when it comes up for a re-vote later in the week. Please tell them not to vote based on public opinion polls, but to truly vote for the good of the nation.

Our first line of defense is not missiles, is not soldiers, is not tanks. It’s a strong economy. Failing to pass this act will endanger our national security, more so than Osama bin Laden or Saddam Hussein ever could.