No bailout

I wrote this letter to the Register-Guard:

Columnist David Brooks (R-G, 9/20) writes that cracking down on subprime loans would have been saying, “Don’t loan money to poor people.”

Yes, that’s exactly right. Don’t loan money to anyone who can’t afford to pay it back, to buy a house, a car, or anything else. Don’t give them credit cards or payday loans at exorbitant rates of interest.

You’re not doing them any favors, you’re just helping them dig themselves ever deeper into a hole they’ll never get out of. Which by the way is very profitable for the lenders — they make a lot of money off of poor people — until the crash.

And don’t turn around and sell these debts as so-called investments to other financial institutions and middle-class people who should know better. “Mortgage-backed security” is an oxymoron. A debt is not an asset.

Unregulated capitalism doesn’t work. Never has, never will, not for long.

Folks, the party is over. The longest spending binge in American history has ended. You cannot live a middle-class lifestyle on working-class wages. Read the book “Your Money or Your Life” by Joe Dominguez and Vicki Robin and learn to downsize.

* * *

I was happy to see the bailout plan go down to defeat in the House. No socialism for the rich. My Rep. Peter DeFazio voted no after receiving 3,000 phone calls and 3,000 emails, one of them mine, against the bill. A Los Angeles Times article credits an outpouring of anger from the voters for stopping the bill. Despite what the “leaders” of both parties wanted, “The voices of angry constituents seemed to count most.”

I am not convinced that the U.S. economy will collapse if we don’t give $700 billion to the investment banks whose reckless greed got us into this mess. We cannot afford to borrow this money from Saudi Arabia and China and add it to the already huge deficit and skyrocketing national debt. Interest on the national debt is already costing us $400 billion per year.

Nor do we need to do that. The money can be raised through taxes on the rich and on stock market transactions, discouraging speculation in the process. Speculation has replaced investment. For some concrete proposals on how to do this, see “The nation’s social bargain with the rich,” by Derrick Z. Jackson in the Boston Globe.

The big financial institutions that are in trouble, and not all of them are, should be allowed to fail, not bailed out. The sooner we get them off the playing field the better.

DeFazio was quoted recently in the Register-Guard as saying that any business that is “too big to fail is too big to exist.” He advocates that we start enforcing the antitrust laws. Which were passed because this country has been here before.

I should add that rich people do have their uses. Someone wrote that they “are a good source of protein.”

ABC news today was blatantly biased in favor of the bailout bill, with almost no attention paid to its critics. Which reminds me of why I seldom watch TV news, the propaganda machine of the establishment. They said the stock market took a 7 percent dive today, the largest single-day loss in history. Yeah, so? All that money that was supposedly lost was digital money. An increase in value of a stock you own, or a house for that matter, doesn’t really exist until you cash it out. Outside of buying government bonds, investing means taking a risk. You can lose, and lose big, so don’t “invest” any money you can’t afford to lose. And always remember that the people running things are liars.

Most people only learn through pain. If investors don’t feel any pain from this, they won’t learn not to do it again.

Yes, I think we should do something. We should put money into all the safety net programs — unemployment insurance, food stamps, Medicaid, subsidized housing, etc. — that are needed to catch all the people who will fall off the bottom during this recession. Tax the rich. Re-regulate financial institutions so they won’t do this again. Start educating people that there is no tooth fairy and that they will have to live on their income.

Start a national discussion on class, inequality and the need to end America’s cheap labor policy. Rebuild our infrastructure, including health care and education, and build the new energy infrastructure needed to produce a greener country and reduce climate change, creating jobs in the process. There is no reason not to do all this except the vested interests that are making money off of the status quo, and the middle class fear of change.

Graphic below from the NY Times. Bush’s first term started in January, 2001. I presume by “Security” they mean war. Social Security and Medicare should not be counted as part of the federal budget, since they both have trust funds. Politicians do that so they can count trust fund surpluses as income, reducing the apparent size of the yearly deficit.

Click on graphic to see a larger version.