The reason for the bailout is to increase liquidity-- to insure that money for borrowing is available. That money will enable investors to keep investing in stock trades, bonds, mortgages, business loans, etc. and of course, will enable borrowers to borrow.
Thom Hartman described a remarkably simple solution that was used in response to the great depression of 1929the USA for 50 years, and which he reports England is now using-- add a small, quarter of one percentage point tax on stock trades.
"In the United Kingdom, for example, whenever you buy or sell a share of stock (or a credit swap or a derivative, or any other activity of that sort) you pay a small tax on the transaction. We did the same thing here in the US from 1914 to 1966 (and, before that, we did it to finance the Spanish American War and the Civil War).I say add that same tax to loans as well. When a person takes out a mortgage, with less than a minimum amount of down payment, there's an extra fee, usually .25% or .5% charged as mortgage "insurance," called PMI. When the fed raises interest rates a quarter point to affect the economy, nobody screams. Why not take this kind of light touch approach to make the bailout solution pay for itself and remove the risk that main street now faces.
For us, this Securities Turnover Excise Tax (STET) was a revenue source. For example, if we were to instate a .25 percent STET (tax) on every stock, swap, derivative, or other trade today, it would produce - in its first year - around $150 billion in revenue. Wall Street would be generating the money to fund its own bailout. (For comparison, as best I can determine, the UK's STET is .25 percent, and Taiwan just dropped theirs from .60 to .30 percent.)"- Advertisement -
In this case, the bailout is making it possible for credit to be available. Make the beneficiaries pay that small tax that will, in a few years, entirely recover the $700 billion.
Who are the beneficiaries? At first blush, you might think the beneficiaries are the banks and financial institutions being bailed out. They are one portion of the beneficiaries. But the liquidity problem that has dried up credit is affecting companies, individuals and organizations all over the world. I heard of one charitable organization that provides services to children, that has done so for 30 years, using credit lines to tide it over between delivery of government funds. That organization, for the first time in 30 years, just had its credit line pulled. All over the USA, as credit has tightened up, the victims of the liquidity crisis who will, because of the bailout, be able to borrow money, will be the indirect beneficiaries.
This ought to do the trick to get all the fiscally conservative bluedog democrats on board, since this approach actually pays for the bailout. Some right wingers may oppose it still, but at least this approach protects America and Americans from being stiffed. And the next president will have an opportunity to turn the "investment" into a win.
I don't understand why this idea isn't being discussed. Why aren't the mainstream media reporters talking about the idea of a small tax to insure recovery?
Call them. Email them. Tell them that they should be covering this angle on the story.