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An alternative use of $3 trillion (that's 12 zeros) that could actually save the economy
Just give twenty-thousand dollars to 90 percent of working class Americans, then use the remaining 1.25 trillion for the fiscal year 2009 budget and cap it off by seizing the fed (it's actually independent from the government) and all of the TARP receiving banks to prevent the bankers from ever being our masters again. That plan would increase revenues to an all time high while investments and new small businesses would rise astronomically. ^__^
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I like the way you think.
March 25, 2009 7:44 PM | Reply | Permalink
I like the way I think too lol. By the way, I must say you are quite a thinker yourself.
March 25, 2009 7:49 PM | Reply | Permalink
All the beer I can drink, cigs I can smoke and maybe even some new shoes.
Just kidding.
I am a redistribution of wealther--or something akin to this. No pitchforks.
March 25, 2009 8:11 PM | Reply | Permalink
If you ever spot Ellen around, she has a similar plan with good supporting details. Unfortunately most has been through scattered comments going back the last few months.
March 26, 2009 1:33 AM | Reply | Permalink
True Saladin. And I then proceed to mix her up with Yva who has three or ten names and three avatars.
But Saladin, you are my hero. You are at the highest level of tech and explanation. A good writer and a presenter of variety shows.
I look forward to my next show presented by YOU.
March 26, 2009 1:46 AM | Reply | Permalink
Awe Thanks Dickday, I've got about 10 started, but i haven't been able to find the time to complete them. I'll make the time to finish one or two real soon.
March 26, 2009 2:09 AM | Reply | Permalink
An alternative: Seize the Fed and the big banks, give them new management and new stockholders,
and
also have every person (individual and corporation) chip in 5-10% of its real net worth towards building green infrastructure, 100% health care, and alternative energy systems over the next 5 years.
Would that be worth it to you?
March 26, 2009 2:19 AM | Reply | Permalink
Interesting, you really like the individual sacrifice component of recovery. What do you think of the national service debate in congress?
March 26, 2009 7:05 PM | Reply | Permalink
Professor, here's a variant of your idea from one of the big econ blogs:
http://interfluidity.powerblogs.com/posts/1236786808.shtml
March 26, 2009 2:30 AM | Reply | Permalink
The comments on that blog entry are better than the entry, imho. It is typical of the simplistic analyses which are so common these days.
"give money" is one problem.
"three options": to bank creditors, to banks, to bank debtors -- is another, but it can be used to illustrate the question of control of money and social behavior.
You can arguably "give money" to people who have suffered losses. But giving real money to people who have suffered unreal losses strikes me as insane in this context. "unreal" includes the fake, the idealistic, and the imaginary, here. If I inflate an asset value and then claim a loss on the inflated part when reality sets in, would you "give money" to me for it??
Maybe we should give money to none of them, but let them get it the "old fashioned way", let them earn it back.
Bank creditors are investors. Investors were ripped off by borrowers with the aid of the banks.
Bank debtors are borrowers. Borrowers were seduced or defrauded into taking on insane deals.
Banks are subsidiaries of holding companies which should never have existed.
In addition to the three categories mentioned in the target blog, there are gamblers and crooks, but you're probably tired of me reminding you about them so I won't elaborate.
There are three, or maybe four, separate problems here.
March 26, 2009 4:25 PM | Reply | Permalink
Haven't looked the comments on that post, but will now. That said, I'll disagree with you about the respective roles for consumer borrowers and bank creditors in the current mess. The creditors have a responsibility to do some due diligence on their debtors - the banks - and failed. Consumers have no responsibility in the current mess. They were offered cheap money and took it. Caveat Creditor, I say. That's a first point.
A second issue is what Waldman is on about. If you are going to conduct a bailout in a credit crisis, you might as well start bailing at the beginning of that domino line (ack the mixed metaphors): the households who cannot pay their credit-cards or homes because of lay-offs and other things. they aren't the culprits here. Or at least no less 'deserving' than banks and bank creditors.
March 26, 2009 4:51 PM | Reply | Permalink
No, consumer borrowers have a responsibility too. "I was seduced by greed, Your Honor," is not a moral excuse even if it gets you a lesser sentence. Consumers who took not so cheap money and didn't pay it back have ripped off the system for trillions. Consumers who took not so cheap money and are still paying it back are suffering.
The details are different for consumer borrowers and consumer lenders: The FDIC covers consumers who loaned money to banks to loan to consumers or others. Consumer borrowers and non-consumer lenders are different too, but that's beside the point, a mere detail at this level of analysis.
My very first suggestion in October was to allow owner occupied housing to get a lease-option deal to keep the owner in the house, using angel investing. But your thinking, as presented in your words here, is not "zero sum", it's half-assed at best.
I've also suggested that credit card rates be capped but that's a side issue and the amount of money is marginal to neglible compared to mortgage debts.
Consumers and homeowners and producers who are otherwise innocent and were hit by the side-effects of the recession and popped bubble might warrant some attention, but I'm against Paternalism and Maternalism as a mode of government generally.
March 26, 2009 5:04 PM | Reply | Permalink
I should clarify a point...
"I've also suggested that credit card rates be capped but that's a side issue and the amount of money is marginal to neglible compared to mortgage debts."
While the $ amount of such debt is small, if the interest rates are high, then the burden is far from negligible. A HELO at %5 and $50K costs roughly the same as a credit card at 25% and $10K, in interest payments (extreme numbers). That's why you saw so many ads trying to get people to "consolidate" their credit card debts into equity loans, it made a lot of sense to pay the lower rates. I don't have numbers on credit card interest and principal payments, but I saw a chart which indicated that cc debt is marginal compared to mortgage and "other".
March 27, 2009 12:49 PM | Reply | Permalink
Great link, I appreciate the info.
March 26, 2009 7:07 PM | Reply | Permalink