In the tradition of Teddy Roosevelt, here is an alternative solution to the mortgage crisis which is a 'square deal' for all involved.
As the Senate works through the night on a new mortgage bailout plan which is basically the same, in all but some trivial particulars, as the one which the House rejected in an unusual fit of responsibility on Monday, it occurs to me that I might as well take my stab at offering a solution to the mortgage crisis, and I bet I can do it without handing Henry Paulson a blank check for $700 billion or repeating the fundamental mistake of having the government too heavily involved in the mortgage business.…
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26 - Heloise
No Dave I did not miss that something needs to be done: put the f*&^(*& in jail. Let them use their own money. Let them follow the accounting reform laws, let them back up the banks. THere is no need to print 700 billion dollars that's what we are against.
Funny the economists agree with what I've said, so it must be over your head, your bald head LOL.
Now that the damnage is done even when the bill passes the stock market will still sink and stink.
Credit that's what got us into this mess in the first place.
The bloggers FYI were not only against the invasion of Iraq but about 3 years ago called for us to get out way before shit got really bad there and then we had to stay and SURGE. Don't make me mad.
That was a turning point missed by Bush but what else is new.
27 - bliffle
It's all the fault of the Ownership Society: we own too much. In fact, we own even more than there is to own!
How can that be? How can we own more than there really is?
According to all the paperwork in the USA economy, we own about $550trillion of assets. But the entire value of all the REAL assets in the USA (houses, land, buildings, cars, gold, toothbrushes, everything that has INTRINSIC value) is only about $45trillion.
So all that inverted pyramid of structure is balanced on a very small area.
So, when the scam operators of that $550trillion EXTRINSIC value fantasy tried to increase THEIR numbers by exploiting the little old INTRINSIC value base they overstressed it and some small cracks developed. And those cracks are amplified 12:1 when they go up the pyramid. Thus, a mere trillion in the INTRINSIC base causes a 12trillion crack in the EXTRINSIC fantasy (otherwise known collectively as 'WallStreet').
Now comes Paulson the Plasterer who wants to apply some plaster over the cracks in the extrinsic economy (that is where he's from, that is what he knows and that is where his friends and loyalties are). He gives not a thought to the intrinsic economy because it has only been the subject of exploitation in his thoughts. He's like a slave owner surprised to discover his slaves are dieing merely because he started feeding them sawdust.
P the P is willing to do whatever it takes to cover up the cracks in the extrinsic market.
But his goal is hopeless! Anything he does requires looting the little intrinsic base, which cannot possibly supply enough value to plaster up the pyramid, and everything he liquidates will cause more cracks. It's a downward spiral.
Far better to apply some plaster (in the form of newly printed currency-diluting dollars from the Fed) to really mending the real economy at the bottom.
Let the WallStreet economy go hang. It's easily rebuilt, if anyone thought the whole damn thing was worth it.
Put the money into downhome mainstreet property owners, factory owners, communities.
Throw WallStreet away.
But that's not what we'll do because all of our "Financial Advisers" as appointed by successive presidents, are from the Financial Sector, as it's called. (Paul O'Neill was different, and so he was driven out).
What we'll really do (under the influence of advisors who have conflicts-of-interest) is to loot the real economy to try to shore up the mythical economy. All in an attempt to "boost confidence in the financial system", not because they have any real idea of what to do.
28 - Dave Nalle
The error which you and many others are making here, bliffle, is in thinking that there is some clear dividing line between the fictional constructs of 'wall street' and 'main street'. That us vs. them mentality is self defeating and will doom us all.
If we abandon Wall Street we're abandonning the companies which finance the companies which hire the people who live on main street and buy products and services from the smaller companies which are located on main street, and which provide the stocks which the people on main street have put their retirement in.
So what you are saying is basically screw everyone and let it all come crashing down. Apparently you're an anarchist.
What we need is a solution which takes into account both the needs of the people and the needs of the economy, which is what I tried to suggest here. Rather than just throwing money at the superficial aspects of the problem we need to focus on restructuring, both for individuals who are overextended and for large corporations which are mismanaged. We need to write off, refinance AND recapitalize, not just one of the three. Doing just one will be a disaster, whether it's a wholesale write-off as you nihilistically suggest or a pure recapitalizing bailout as Paulson wants to do.
But you know what we need even less than anything? A bailout bill with another 400 pages of absolutely gratuitous pork larded onto it, which is what the Senate has just vomited up.
Dave
29 - handyguy
Is any and every government expenditure to be labeled as 'pork'?
According to Business Week:
The whole deal was attached, for procedural reasons, to a so-called mental-health parity bill that had already passed the House, which requires insurers to treat mental illness much as they do other health problems.
[5-year cost: $3.8 billion; but this hardly seems like frivolous pork.]
from Politico:
The biggest piece in the tax package is an extension of protections for millions of middle- and upper-middle-income families who would otherwise find themselves exposed to the higher levy under the alternative minimum tax. This alone accounts for about three-quarters of the cost, $78.8 billion in 2009.
Almost $14 billion more can be attributed to a variety of tax break extensions important to business, including the research and experimentation credit worth about $8.4 billion in 2009.
At a time of high energy prices, the bill includes about $18 billion in tax benefits for renewable fuels, to be financed at the expense of the oil industry in some cases.
The rural school aid is smaller â€" about $3.3 billion over the next five years â€" but has great importance for many Western communities and could be a selling point in the House.
Is Dave claiming all these are equally indefensible and worthless?
30 - bliffle
But of course there IS a distinction between the intrinsic economy and the extrinsic economy.
One day the Dow dropped 700 points and I was told that the economy lost $1.2trillion! Was it true? Did $1.2trillion of buildings, macines, cars, gold and electric shavers suddenly evaporate and disappear? No. All that happened is the market value of some pieces of paper changed. Nothing in the real economy was affected. We did not sell off or destroy REAL things.
If the REAl intrinsic economy were decreased by , say, destroying every 40th house in your community, you would have noticed. I'm sure.
31 - Dave Nalle
Handy, there's a subsidy for the import or manufacture of wooden arrow shafts for kids, ferchrissakes - $2 mil pricetag.
There's an expansion of the 1870s era mohair and wool subsidy which has been on the CAGW list since CAGW was founded. It was originally passed to underwrite the cost of cavalry uniforms for the Indian Wars and instead of repealing it 140 years later they just EXPANDED it.
There's a tax break for video and film production companies.
There's a subsidy for the Puerto Rican and Virgin Island rum industry, plus additional industrial subsidies for Puerto Rico.
How about a special economic development fund for American Samoans?
Or do you prefer money to underwrite the construction of a NASCAR racetrack?
That stuff is the raw essence of pure pork.
How they could take a bill that was already unacceptable and lard this crap onto it is beyond belief.
Dave
32 - El Bicho
"How they could take a bill that was already unacceptable and lard this crap onto it is beyond belief."
"this crap" is what's going to get some to from 'Nay' to 'Aye.' It's the way the town works.
33 - troll
There's a subsidy for the Puerto Rican and Virgin Island rum industry...
that's the most sensible thing I've heard in days
34 - Cindy D
bliffle,
I must say that I have been an avid reader of every one of your posts lately. You are in perfect form!
35 - El Bicho
"There's a tax break for video and film production companies."
and that will create jobs
36 - bliffle
"There's a subsidy for the Puerto Rican and Virgin Island rum industry..."
Don't tempt me.
Oh, is there a subsidy for Charles Shaw Cabernet?
37 - Silas Kain
So, a provision for Hollywood? Up go the contributions to Obama. Rum for Puerto Rico? There's the Latino vote. Pander. Pander. Pander.
38 - bliffle
Now comes the news that this dreadful thing has passed.
It will instantly cost every US family $10,000 with no real hope of success.
39 - DaveNalle
Hardly instantly. Are there no checks on your alarmism, Bliff? You make it sound like a stormtrooper is going to come knocking on our doors tomorrow with his hand out for the money.
They'll stretch the actual cost over years and take it out of us in inflation rather than in actual cash.
Dave
40 - handyguy
But the 'pork' is tiny compared to the rest of the bill. And no one is criticizing the mostly supportable items I mentioned.
41 - bliffle
The cost will come due quickly, when the Fed issues the funds. However, we get to make time payments so that we may repent at leisure.
Despite the fabulous expense, this expenditure will have no visible effect to ordinary people. The money will go to line the pockets of the bankers and financiers who sponsored this reaming.
Talk about "Moral Hazard"! Having not suffered for their sins they will visit new calamities upon us.
This plan will not help even one family which has had it's mortgage foreclosed.
It's a ripoff, and a setup for the next ripoff.
What fools we are to volunteer for slavery in the service of those scoundrels.
42 - DaveNalle
Bliffle apparently has no job, no home, no savings, no retirement account, no stocks, no 401K. He lives entirely in the underground economy and keeps his money in cash in his mattress.
Dave
43 - Cannonshop
Dave, everything you listed?
It's still going to be ripped off. I think Bliffle's right on this one-it's not going to stop the haemorrage for the rest of us, it's just a bandaid until the perps can get safely out of reach when the rest of the house topples.