Main Street Blues

Politicians and others in recent weeks have been liberal in invoking the image of a suffering main street when considering the so-called Wall Street bailout plan and its potential effects on the average American. Senators John McCain and Barack Obama each used variations of the term twice during Friday’s debate, and traditional media and bloggers have adopted the imagery with equal zeal. In fact, though the idea may be fast approaching cliché status, main street’s pain does deserve more than just lip service. The effects of financial turmoil are already beginning to be felt on main street, or at least outside of the financial services industry, and the early effects close to home are almost scary enough to warrant the cliché. According to a Sept. 27 piece in the Austin-American Statesman, Central Texas public agencies are experiencing trickle-down effects. Some agencies have been hit with higher interest rates on variable rate bonds and short-term debt called commercial paper. Last week’s volatility in financial markets forced investors to pull their investments out, resulting in higher interest rates. Rising interest rates for commercial paper cost the City of Austin about $85,000 in interest just in the last week or so. Treasurer Art Alfaro told the Statesman that Austin Energy and the Austin Water Utility will switch to paying for capital projects with cash, rather than short-term debt, until investors return to...

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