What an opportunity is being given to us liberals! and are we
going to blow it?
Comes now a Bush initiative to "save our financial system." Once
again the Sky is Falling! We must be Very Afraid! If we don't
take action quickly, banks and car dealerships will soon be lying
around in pools of molten concrete all over America. Only
former Goldman Sachs CEO Henry N. "Hank" Paulson can save us;
all we have to do is make over $700 billion of taxpayer dollars
to him, for his use alone, and he will remove the danger, make
everything good again.
Now it does happily seem that there is a limit to the guff that
Murricans will swallow. For the astonishment and outrage really
seems to be universal. A cause has emerged that has united
Obama and McCain, Kucinich and Will, Robert Samuelson and
E.J. Dionne. Even the ineffable Newt has come out with his
"Thanks, Hank Baby, but no thanks." Wow!
Now let's grant for the moment that there is a financial crisis
of some sort. This of course means that the "Masters of the
Universe" -- henceforth MOTUs -- have failed us. If there is
a financial crisis, this is the opportunity for liberals to
step in and solve it.
So here are some thoughts. First: there is talk of "restoring
confidence on Wall Street." Well, IMHO this is the last thing
that we want to do. I want the MOTUs, to be very unconfident and
to walk very small. They have been used to making one hundred
times what we make. It won't hurt them to have to make do with
only twenty times what we make.
Now, let's look at the people who can seriously be hurt by any
economic slowdown. I pick as a first example the many many
merchants around the country who make 80% of the year's take in
the November and December months. Right now, they are
inventorying up, and they need a loan from their neighborhood
banks to buy what they hope to sell. Are neighborhood banks able
to give them this loan? If it turns out there is trouble, here
is where the tools of the Fed step in. For the Fed not only sets
the discount rate for overnight borrowing, but it has the power
to adjust the percentage of reserves that banks must hold. If
the Fed were to lower this percentage, perhaps by a point,
billions of dollars would be freed up available for loans. This
is hardly a liberal issue, although perhaps it was back in 1912
when the Fed was established.
Another class of people who are suffering everywhere are what can
be called the variable mortgage people. People who were assured
of the universal rule that housing prices would rise forever.
They may have been foolish, but they weren't as foolish as the
MOTUs. Furthermore they are a lot poorer, and there are a lot
more of them.
They can be helped by instituting a Moratorium year, during
which all holders of variable rate mortgages will have to pay
only the rate that they first paid when they got the mortgage.
During this year, things can be looked at, accommodations can be
worked out, people can become educated as to their opportunities,
and dangers, and with luck new confidence in housing financing
can be brought back to normal. This Moratorium year can of
course be extended or shortened.
There is another crisis that is overwhelming our citizenry,
except it is not a "crisis" because it has been going on for so
long. I refer to the so-called Rust Belt. Detroit, Cleveland,
Buffalo are basket cases. Have the government buy and repair
3000 vacant houses in each of these cities, repair them, and then
either raffle off the opportunities to buy these houses, for say
$75,000. If we assume that the purchase and renovation of each
house costs $300,000 -- lots of work for carpenters, etc, no? --
then 3000 houses per city costs $1 billion per city, $3 billion
Can we agree that $3 billion is less than $700 billion?
Furthermore, the government owns something for this money, it
owns almost 10,000 homes. For the government will own the houses
until the $75,000 mortgages are paid off.
This should be billed as an experimental, pilot program. If it
works, it could be expanded to other cities. In the meantime
it would certainly do good in these hard pressed, heartland
Al Gore has proposed that we institute a program to wean
ourselves from fossil fuels in ten years. What an opportunity
for economic rejuvenation! (We ignore the possibility that it
might save the planet.) This should be a mixture of the
Eisenhower Interstate Highway program and the Kennedy Man on
the Moon in Ten Years plan. Subsidies for hydrogen, payouts
to people who buy (American made) hybrid cars, subsidies for
silicon panels, massive wind machines, the whole megillah . .
The economy would bloom like a rose, or, rather, like a
What will pay for these subsidies? Let's go back to Wall Street
for a moment. What about a sales tax on each and ever stock
trade/purchase? No, nothing exorbitant, nothing like the 5%
sales tax that most ordinary Americans have to pay on most of
their purchases. A tax of half of one percent--.5%--would not
hurt the normal trader, but it might slow the casino-like
qualities of Wall Street, where one buys $1,000,000 in the
morning and sells it for $1,000,050 in the afternoon. And of
course such a tax would bring in billions.
Just a few ideas. Maybe OEN readers can come up with other and
better ideas. The Dems are used to snatching Defeat from the
Jaws of Victory, but maybe, just maybe, a Congressman or two
could take an interest. The bottom line: liberals should develop
some ideas for making America better, become proactive and
not merely reactive.