What effect will the government bailout have on the housing market?
The government bailout will—
|Set us back further||65 percent|
|Help turn things around for us sooner rather than later||24 percent|
|Have no real impact on us||11 percent|
Well, it appears the House of Representatives, or at least House Republicans are as skeptical about Treasury Secretary Paulson’s $700 million bailout plan as our window and door industry voters. Wall Street reacted with the largest percentage point drop in the Dow Jones average in a single day. As of this writing, it's very unclear where this will go next in Congress.
Based on our results, I suspect few of you want it to go anywhere. Nearly two-thirds of you voting in last week’s poll said the bailout plan will set us back further. I heard from one reader—who I think expresses the views of many. “I am against just giving monies to help those who put themselves into such a position. I had an experience back in 1980 where we speculated on remodeled homes and were in debt for them. The bank closed on us and took away what operating capital that we had, and that was quite a shock,” he recalls. “We worked our way out without bankruptcy or outside help, other than our Heavenly Father, and I have to say today that that experience was to our advantage. I am a great believer in the old 4-H saying: 'Give a man a fish and you will keep him for today - Teach a man to fish and you will keep him forever.' I believe it's time we teach these institutions how to fish.'"
Last week, I noted, that I’m sure the gut reaction to news of the bailout was “How come Wall Street gets saved while struggling window and door companies don’t get any help like that from the government?” But deep down, I suspected most business owners in the industry would not expect or want the government involved in their operations, even if they were struggling.
Others--and not just those on Wall Stree--still see a need for a bail out. The National Association of Home Builders' board of directors unanimously called on Congress to act now before conditions deteriorate to a point that could trigger a global financial meltdown at a meeting last week in San Diego.
"We agree with Fed Chairman Bernanke and Treasury Secretary Paulson that immediate steps need to be taken to stem the financial crisis,” said Sandy Dunn, NAHB president and a West Virginia-based home builder. “The financial markets are in turmoil and the flow of credit has been severely curtailed for housing and other sectors of the economy. There's no time to waste. Congress must pass legislation as soon as possible."
I suspect that same fear of a financial crisis obviously is driving some in our industry to support the current bailout measures. I can’t imagine all that many window and door people calling their representatives to urge them to vote for the bill, but I imagine there are many who think, “We have to do this.” A quarter of our respondents think it will help.
And despite failing to pass the House, it may still happen. Further downward movement in the stock market--and another bank failure or two--could prompt legislators to try again. As I noted when I started this Talk, this is all a bit over my head. Like you, I'll be watching as this story develops and hoping for the best.