Features

Doug Thompson

Posted by admin |

Mad and broke
By Doug Thompson
Why should people who are poor, or at least poorer, bail out the rich?
People ask that question a lot lately. They ask everybody. They ask themselves. They ask because they’re mad. They’re as mad as I’ve ever seen. They’d really, really like an answer.
My smart-aleck answer is, “We’re poor already. Take our money and we’ll still be poor. The goal is clearly to help stop rich people from becoming poor.”
I stopped giving that answer because people didn’t realize I was joking.
The real answer’s simple: We’re the only ones with that kind of money.
The richest one-tenth of one percent  of the people control 11.6 percent of the wealth in this country. We haven’t had a proportion like that since 1929 — which is rather ominous.
However, that means that the rest of us still have 88.4 percent.
To belabor the point, the government’s after us for the same reason John Dillinger robbed banks. That’s where the money is.
Keep in mind also that we’re borrowing the money. The only reason we’re paying it back instead of the rich is because the money for repaying the debt will come from our loopy, break-ridden tax structure. We don’t need to stop the bailout. We need tax reform.
But why go through the bailout at all? If we must, why not give the people who can’t pay their mortgages the money to pay their mortgages?
We should risk money on a bailout because the cost of a bailout is less than the cost of a Depression, even by the coldest analysis.
Why have a “trickle down” bailout, then? I’m not completely convinced myself. The core answers are for speed and simplicity.
Bailing out millions of homeowners is not something our government is set up to do. Millions of claims would require processing.
The alternative is to just let the treasury secretary write a few large checks to some banks.
For instance, which homeowners do we bail out? I have no problem bailing out a family with a modest home where somebody’s lost a job. I have a lot of problem bailing out somebody who bought a whole lot more home than he could possibly afford because he thought he could turn around and sell it for a nice profit. Then there are contractors who built houses nobody’s lived in yet. They are in a tough spot, but that was a risk of doing business.
If I want the government to bail out the workers and not bail out the gamblers, somebody’s going to have to do some sorting out. That takes time. We don’t have time.
Why don’t we have time? Look at the recent example of the University of Central Arkansas.
UCA is a state-owned college in Conway. UCA had a line of credit. State colleges are not supposed to have lines of credit without telling the state Department of Higher Education and the state Department of Finance and Administration. UCA’s board of trustees either didn’t know that or didn’t care.
The financial crisis hits. One of the banks that got into trouble was in one North Carolina. UCA had a relationship with that bank. Next thing we know, Arkansas taxpayers could be liable for about $5.4 million of UCA debt. That probably won’t happen, making UCA a mild example of the danger a lot of institutions are in.
So here’s the point: A lot of institutions tried to get in on a piece of Wall Street action. Those institutions are linked to other institutions. Multiply the UCA situation by several tens of thousands of times, and you see what can happen: a chain reaction.
The chain reaction has to be stopped at the reactor core — Wall Street.
I don’t like it either.
At least now we’re going to get something for our money.
The first plan to buy failed banks’ bad loans — their garbage — has been replaced by the “Group of Seven” industrialized nations’ plan to buy shares in troubled banks. We’re going to buy the good and the bad, and benefit when and if that stock recovers.
We’ve replaced private profits and shared losses with shared losses and shared profits, which is an enormous turn for the better. It was a plan put together in Great Britain before being adopted by the G-7.
Wall Street’s reputation is shattered, but it performed an important service on Monday that should be praised. When the administration passed a bad plan, even one with $700 billion behind it, Wall Street plunged. When a good plan replaced the first buyout scheme, stocks reacted by racing up. It may be dangerous — or foolish — to read that much into the gyrations of the stock market, but I’m going to give them credit this once anyway.

4 Comments

recross1 October 18, 2008 at 12:42 pm

My question is this,why should we bail out the mortgages at all?Some of us were smart enough to know you cant pay for a 250 thousand dollar home for 400 a month.
Any mortgage company that offered these loans and anyone dumb enough to get one should be left to thier own recourse.I am tired of working my butt off for what I have and these others are going out living well beyond thier means and I am having to come bail them out.
No one helps me and my family,I have been unemployed for 2 yrs now due to a work related accident,and after the workers comp insurance company robbed me I was left to my own resources,and thier is no help for a 48 yr old white man with a left hand that only works 10% now. So bail out….no way.Our tax dollars should help those of us that need it.

Reply to this comment
joe2baba October 21, 2008 at 12:23 pm

this is some of the most ridiculous drivel i have yet to see in this paper.
you are using fuzzy numbers if you think the one tenth of one percent controls only 11.6%. you will have to define controls.

over one hundred and fifty economists signed a letter saying this sellout was a bad idea. it is a bad idea because it is not 700 billion. there was no cap in the legislation. it is 700 billion at one time. this is money we DO NOT HAVE we will completely destroy the dollar. and when that happens the party is over as we will not be able to borrow a dime……can you say goodbye alternative energy, good bye social security, goodbye medicare and medicaid, can you say goodbye to our infrastructure

you have swallowed hook line and sinker the illogic that we simply had to do “something”. i personally agree with billionaire jim rogers who said the thing to do would be to have ben bernanke resign and disband the fed. the absolute malfeasance of wall street and this government has gone way beyond surreal.

some one can go to jail for shoplifting a candy bar at wal mart yet who goes to jail for the meltdown of the U.S. economy

we have a chairman of the fed who is a depression scholar yet he and his predecessor did exactly the same things to bring this crisis on. there are only two conclusions A this was gross incompetence or B this was intentional.

my suggested reading list for you would start with the dollar crisis by richard duncan. i would then suggest financial reckoning day, the creature from jekyll island, just about anything by david cay johnston, a quick read of andrew jackson’s farewell address, and a whole host of others i would be happy to recommend. but please spare us the pablum. do your homework or confine yourself to writing about video games

Reply to this comment
concernedPatriot October 22, 2008 at 10:47 am

joe2baba
andrew jackson’s farewell address is a good read, should also included George Washington’s farewell address.. he warned about a lot of the crap the government is doing…

Reply to this comment

Leave a Reply

Your email address will not be published. All fields are required.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>