Tennis Lilly asked me:
ok Jamie…you’re the money guy…i didn’t want the bailout but they have to do something…don’t they?
I am not an adherent of the “market is always right and will self-organize itself into a better place” philosophy. Bailouts can be necessary. Maybe this time. Certainly the credit squeeze seems well on its way to becoming a serious credit crunch. The rate at which the banks will lend to each other (the LIBOR) has reached some scary heights, and banks seem to have seriously reduced lending to each other and have fled to treasury bills/bonds. Doug Henwood, Paul Krugman and some other people I believe are knowledgeable about economics and finance think a bailout is needed to keep the banks working and not cause the economy to tank.
That said, as I pointed out this plan provides little benefit when this crisis is over, will be run by Bush and his cronies, likely won’t solve the problem and will leave our government $700+ billion dollars further in debt.
However, there are other
alternatives including:
- The financial meltdown requires far-reaching Green solutions
- Top 5 Reasons to Vote Against Wall Street’s $700 Billion Bailout (see item 3 for a number of proposals)
- The Working Families Party proposal
For me, the solution looks something like:
- Swedish style takeover of troubled banks,
- ending foreclosures while loans get reworked so people can pay them,
- investing more money in fixing needed infrastructure,
- putting money into energy conservation and alternative energy for the poor and middle class
- and expanding health care for all.
However, such an approach flies too much in the face of Republican free market dogma to pass. You would think that some of these Republican congress people would remember the Savings and Loan crisis and how the federal government had to take over failing savings and loans during Reagan and Bush the Elder’s terms. Apparently not.