Dear Friends,
It seems to me that the money spent on bailing out the wealthy corporations would have been much better spent keeping people in their homes last year.
It’s economics 101. The problems started with people’s mortgages turning upside down and for a great many a balloon payment that they hadn’t counted on. (They planned to sell the house before the balloon kicked in). Were the money spent on a temporary program to keep people in their homes the vacancy rate in some neighborhoods would have been greatly reduced. Had that happened, the price free fall wouldn’t have been as large. Had that happened fewer people would have been caught in the pinch. Less mortgages in delinquency and fewer institutional repercussions.
Another positive side effect of this means to action is reigning in of the criminal or simply unscrupulous element. The price of housing would have stabilized at a higher level. The people who simply turned in the keys because they were too far upside down in their mortgage would have been dissuaded by the higher price level. This was undoubtedly a cause of further financial distress.
The worst thing the US government could have done is to protect the capital of the elite at the cost of society in general. Protecting the elite helps them but does nothing to address the underlying problem. I believe that the goal of right government is to protect the capital of society in the amalgam. In doing so right government encourages growth in GDP. Helping the elite escape the consequent of their folly only perpetuates the folly. Leading us into more and greater downturns in the economy.
Like Ricardo meant when he said that unless the corn laws be overturned the productive good of the Capitalists and the workers will go to the landlords. (Because the landlords controlled the apparatus of government)! It is my contention that when government serves the interests of one segment of society, instead of the good of all, it serves the interests of no one. The lot of all is reduced. It is only pragmatic to be an International Capitalist.
I think 45 billion dollars would keep a lot of people in their homes. The benefit would trickle up through society. Buoyed by the release of vacant homes, the housing market could adjust with less friction. In keeping people in their homes the crisis on the banking industry would have been reduced. The weakest of the pack would be hunted and killed by the strongest. Thus the banking industry would have been strengthened. Now it has been weakened with a cancer. The weak but politically connected have been protected.
The market will see the best course of action to maximize profits for themselves. They will take the course of action that has now been shown to be best at personal enrichment. Screw the stockholders, screw the customers, screw the whole planets economy, but, give enough money to the right politicians and your sins will be forgiven and you will be bailed out… Economists claim to believe that there are always tradeoffs…
