Bailouts - a different option

Good point. Governments do not like doing things that are sensible. Right wing governments hate doing anything to help the peasants, ooh sorry voters for the other party, and all their rich mates are begging for handouts. So they give it to the rich mates as no matter what happens to the economy at least they have made sure their friends are ok. (Oh dear I can be so cynical where politics is concerned).

Well someone above informs me that the government has temporarily extended unemployment benefits twice in the last year or so, but in this crisis we are probably looking at an ongoing three or four years while the economy adjusts. In Australia, the unemployed have free medical treatment and very cheap pharmaceuticals, as well as unlimited time on unemployment (with some conditions), so a collapse here, while very hurtful, does not condemn Australian workers to total poverty. And we somehow manage to pay for all this while running at a surplus. It can be done, if the ideological BS doesn't get in the way. Lash

Excuse my misspelling, I meant $700 billion. We have approximately 290 million people here in the US (no misspelling this time). That would be per capita approximately $2,500. For a household of five (that's why said for my family) that would be at least $11k, maybe more. Even with your estimate of 50 million households, it's only $550 billion, not trillion. Which would put it well below the bailout level.

Ooops, must have added an extra 3 zeros somewhere. But does a one-off payment really help all that much? A lot of people will blow it, which is surely there own lookout from one perspective, but since a bailout of this kind has an underlying paternalism about it anyway, worrying about them wasting it could be seen as a valid issue. The idea of extending that money to those in need over the period of their need would probably cost even less in the long run. Your way gives those fat cats the same benefit as the workers they have sacked. Lash

At a rough estimate, the US might have 50 million familes, and at 11k that would mean some 550 trillion dollars hand out. I find your maths a fraction suspect. At 11k, the 700 million would help out about 63,000 families only. Lash

Not being American, and besides being very much what Americans label "liberal", I have some difficulty in understanding your concern with the power grab, because I don't know enough about your system to either agree or disagree with you. Australia has always alternated it's political power between a party more or less like your Republican party, and a mildly socialist party which over the past 25 years has drifted right to where it pretty much equates with your Democrats. For us this sort of financial management by government is normal, whichever party is in power, but it's far more likely to be Labour which would introduce something like what I suggest here. Our unemployment benefit has no time restriction at all, as long as you can prove that you have been actively seeking work, so this issue simply wouldn't come up here. It is also indexed quarterly to the CPI. It's fairly strictly enforced, especially over the past fifteen years, so it's not all that easy to "rort" the system, but it does give Australian workers a safety net that avoids the spectre of homelessness. Workers in the currently troubled areas, especially finance, are in difficulty, as the banks and financial institutions have sacked thousands of workers, many of whom took on unrealistic mortgages on the basis that their overpaid jobs would last forever, so house prices are falling in a buyer's market, at least at the top end of the scale. But on the whole, even if our own car industry goes down, and it is struggling, the workers will have some support for as long as needed. Lash

T.A.R.P. is a very long and complicated bill, some 400 pages plus. It essentialy and somewhat shadowy way, transfered a great deal of control over our monetary system to even fewer people and with no oversight, or control. Further, it is a constitutional issue, and we already have enough constitutional issues with the federal reserve, the creation of which is a lot of why our dollar is shytye now and our economy is colapsing, taking the worlds with it. by our constitution, only congress is suposed to have the power over money, for the reason that congress is a direct represenative of the people, s one of the 3 main branches of the constitution. this act, created a 4th not described in the constitution as well, with none of the checks contained in the constitution to control it. This is something not realized by a scary number of people in this country. there are proper and legal ways of amending the constitution, it is a process that requires a large number of states each to vote in referendum as well as other processes. there is a reason no one saught to try and ammend the constitution with this, because they knew it would never pass, the screaming for the heads of congress over this was nearly unprecedented and it was passed through strong arming and out right threats, including threats of martial law, no I'm not exagerating, that is exactly what I meant. the contistution works and the government and country function beautifully under it when followed. the problems here aren't problems with our constitution, but problems we seem to have remembering it exists. this document is pretty sacred to us, so we get real touchy about fooling with it. We get real touchy when the government grabs power and control from us and especialy so when they circumvent the constitution to do so.

Very well said, X, as usual! Lash, I am surprised I agree with you too, in the same way X did. To be honest, I think if the government just sent every single person in the US a big fat check, and be done with it, it would do as much or more to help the economy at this point. And I thought all that haggling and those meetings before the bailout bill was passed was for the express purpose of putting controls, accountability, etc, over the whole thing. Then it gets passed, and interestingly, there seems to be no oversight whatsoever, no help for the people, and the banks are off investing in each other, in failing banks, and in foreign banks, while our economy stagnates. I have more sympathy and more interest in helping the car manufacturers than the banks, just because of all the jobs it will affect and also because of the government interventions in the auto industry, with powerful beyond belief unions and weird laws that make it very hard for the Detroit auto makers to run their businesses properly. That said, I also hold those companies responsible for their situation as well. The banks, the mortgage fiasco, I feel the government, people like Barney Frank, did not help when they could have seen it and stopped it, but basically I think the banks did it to themselves, and I would rather see them go down, and let the smaller banks that did not participate in such practices fill in the gaps. And again, help the people who I think were often duped and didn't understand all that they were doing or getting into, and even didn't really understand that they couldn't afford the houses they were buying. Anyway, it is a mess, and it is very scary. That these banks basically stole 350 billion from us and thumbed their noses at us. They raised such a fuss over the private jets of the auto makers -- which I agree they shouldn't even have at this point -- but not one lawmaker has tried to go after AIG and the others for the insane parties and trips! So, they keep saying that our government basically owns a major portion of the banking industry, but so far I have not seen that the govt owns anything. It appears as if they just handed them the money and let them off the hook.

Ah but that only loans small amounts. Our banks will not even consider small amounts. They want to loan big and then they get upset when people cannot pay it back. Also our banks will not lend to people on unemployment benefits as they see us as having no income as it can be taken away so easily. This would need to be changed. You would need a bank that is willing to lend small amounts and willing to lend to people who are out of a job.

I'm glad you picked up on the loan suggestion, as I feel this could be a very constructive solution to some elements of the crisis. In the East there is an institution called the Grameen Bank, which lends very small amounts of money (by Western standards) to women (men tend to spend it on luxuries) in places like Bangladesh, where it started, and India, money which is used to set these women up in small cottage industries. The loans are charged interest at the industry standard rate. A village will form a Grameen group, the group itself decides who gets a loan, and also ensures, through social pressure, that the loan is repaid. The flow-on when several women in the village are producing necessary things for local use is enormous. The bank has a repayment record better than Chase Manhattan at its best. My suggestion takes that a little further, and certainly accomodations would need to be made for Western circumstances, but I suspect that on this bigger scale it could provide significant local economic stimulus, keeping the money created within local communities in the main. Lash

Well all that is possibly so, but this discussion already accepts that and looks toward a solution, not a recapitulation of the ideological sttitudes. Lash