both major parties rushing to get an agreement to spend $700bn of taxpayers’ money to pour down the drain of huge financial institutions which are notable for two characteristics: incompetence and greed.
The only economist worth his salt in the Great Depression was Will Rogers: "Stupidity got us into this mess, why can't it get us out?"
And he was right. Loose money crashed the stock market: tight money and protectionism created the Depression. FDR's alphabet soup of TLAs maintained it until America loosened money and dropped trade barriers in celebration of WWII. ;-)
I know, throwing more money at the stupids who counted on an ever-rising market, or Fannie's guarantee to (maybe) bankrupt the US government to protect its risk-riddled portfolios, seems counter-intuitive. (And that's the polite phrase!) But the FDIC will be throwing nearly-dead banks at solvent ones while the Treasury makes up some of the loss sustained by the GSEs.
We will not make any money off this bail-out. We will merely maintain our honor and our economy.
Let’s face a historical truth: we have never had a “free market”, we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with “big government” when it served their needs.
Yes, and you may say the Mob never minded Prohibition. Your point? And how free was a market with Fannie and Freddie at large? (Loose?) It is precisely the lust of Big Business for Big Government that must be thwarted to save the little guy in his garage.
The first big bail-out was the decision of the new government to redeem for full value the almost worthless bonds held by speculators.
So, "the first big bail-out" was in fact the first time the U.S. government honored its debts? Sophistry.
Look, if the government wanted to help the people who sold those bonds in the long interval between purchase and redemption, then private citizens were perfectly capable of raising a subscription, or the Federal government could have voted a pension. Don't confuse charitable relief (honorable in itself) with honoring your obligations.
The rationale for taking $700bn from the taxpayers to subsidise huge financial institutions is that somehow that wealth will trickle down to the people who need it. This has never worked.
You're damn right. The system must be left open for little businesses to bloom and grow tall enough to reach the sunshine. It's not "trickle-down", it's "bubble-up".
The alternative is simple and powerful.
A perfect description of National Socialism.
Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom “the free market” has not come through.
Yes, we did that, it was called "excess housing".
Stop foreclosures and you destroy any value in the property that the bank now owns: that means you destroy the bank. (Dems: that means you MAKE THE CRISIS WORSE.) Borrower and lender will have to agree that the illiquid asset is not worth the bank's time and that the would-be homeowner needs a place to live. To get their payments, the banks will have to negotiate. Some houses will be worth more resold, many will not.
Face it, we've all lost. The bubble price of the house is now a chimera. We have to work with the old price of the house, adjusted for inflation.
We have a historic and successful precedent. Roosevelt’s New Deal put millions of people to work, rebuilding the nation’s infrastructure, and, defying the cries of “socialism”, established social security. That can be carried further, with “health security” – free health care – for all.
Except that FDR did not fix the Depression, and now Social Security threatens to destroy us. What will HillaryCare do to us?
How about this: we create private funds out of Social Security (15% of our income, remember). We largely deregulate banks and investment houses, but we set up a special category of bank that will follow very tight investment rules and be certified by a Pension Board (like the Federal Reserve, beyond the direct reach of Congress).
That way, even people who rent (quelle horreur!) can accumulate for a retirement, and the U.S. government will no longer be required to police the entire investment world. No one will be forced to seek funds from these banks, though the attraction will be powerful enough that many will jump through the hoops to qualify.
In the $600bn for the military budget, once we decide we will no longer be a war-making nation.
No, we will merely be poor and bullied. Europe's defense budget will swell if America is no longer there: you'll be poorer, Mr Socialist. Japan and Australia will also swell their armament.
And in the swollen bank accounts of the super-rich, by taxing vigorously both their income and their wealth.
"Our" wealth, don't you mean, Mr Socialist? A few years of that and we shall have no wealth at all. Yes, since only people like Steve Jobs, Bill Gates and Warren Buffet, all too smart to invest in a bubble, have money, we must now punish them especially hard for, uh, being smart.
Only such a bold approach can save the nation – not as an empire, but as a democracy.
Again, National Socialism rears its ugly head. Once Wall Street is firmly ensconced in Washington, D.C.'s bed, we will never pry them apart except after a general war.
Look, folks: Yellowstone burned to the ground, okay? Quit crying. Out of the ash, beautiful things can grow.
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