By Alan Caruba
I am perhaps naïve, but I can’t shake the feeling that the politicians are once again hustling us all with the endless talk about “bailouts” and “TARP” and the constant repetition that the nation is in a deep recession and that billions must be spent to escape it before a depression sets in.
I am well aware that some banks have failed, that AIG the giant insurance firm could not be allowed to fail without taking whole national economies with it, that there are foreclosures on homes when the owners could not pay their mortgages, and that there is something in the area of 7% unemployment. To me, however, that reads like 93% of the working population remains employed.
The problem comes down to getting the banks to begin lending again and, apparently, having thrown $350 billion at them—no strings attached—they still aren’t doing that. The nation got into this mess when banks and mortgage lenders were compelled by law to make bad loans so it is unlikely they are in much of a mood to starting lending again. Let’s begin by repealing or rescinding those bad laws.
Lending, however, is what they’re in business to do and I keep thinking the government, if it is going to do anything sensible, has got to drag some bankers into the spotlight and ask them when they will begin to lend. We went through a song-and-dance with Detroit auto manufacturers that everyone knows will declare bankruptcy about 48 hours after the new President is sworn into office.
What is taking place now is politics, not sound fiscal policy. If we had had a sound fiscal policy none of this would be happening.
Not only did the last administration spend every cent Congress asked it to, but they borrowed and borrowed in order to keep spending. Shame on you George W. Bush. Shame on Republican leaders in Congress and, for the last two years, Democrat leaders in Congress.
Leaders are not elected to bankrupt the nation, but we have a new President coming into office who is apparently convinced that the answer to the present problem is to spend a trillion dollars.
One trillion dollars is roughly one-sixth of the entire outstanding U.S. federal debt held by the public and one-tenth if you include intro-governmental debt such as Social Security IOUs. Yes, that’s right, the government keeps those “entitlement” programs going by borrowing from itself.
A trillion dollars is more than the Gross Domestic Product of all but twelve countries in 2007.
Franklin Delano Roosevelt kept the last Depression going for seven years by having the government hire folks instead of instituting programs that would encourage private business to do so. Roosevelt wasn’t keen on competition, but Roosevelt had never run so much as a corner store or met a payroll. His mommy held the purse strings of the family fortune and FDR lived on an allowance.
The Congress is full of lawyers, elected to public office, and living off public funding that includes all kinds of perks. Why should we trust or expect these people to have any insight to the way the marketplace functions? Lawyers live rather parasitically off of the need of businesses and individuals who, while performing a useful service for customers, lack the time to deal with the morass of paperwork the government requires.
What these useful members of society would tell Congress and the mainstream media right about now is to SHUT UP. And SIT DOWN. The frantic and secret negotiations going on behind closed doors right now to divvy up that trillion dollars should STOP.
Don’t bail out the Detroit auto makers. Don’t bail out the States coming hat in hand for the opportunity to waste more public funds. Don’t pick and choose between who gets what and how much. Shut off the spigot. And then go back to the bankers and demand to know what they are not providing mortgages, car loans, college loans, and the kind of loans that keep businesses functioning.
Congress has to tend to the problem of foreclosures in order to avoid destabilizing neighborhoods with good, but empty homes. It has to attend to the losses involved with the “toxic paper” that is the “bundled loans” for which no one was ultimately responsible to pay. But a trillion dollars? No.
The example of the successful recovery of the savings and loan industry in the 1980s is a good example of how the current problem should be solved, but a massive distribution of more borrowed public funds is such a bad idea that the only way to get it done is to frighten Americans into believing it is the only answer.
It isn’t. It isn’t even an answer. It’s a toboggan ride to the next Great Depression.
Write your Senator and write your Congress critter. Tell them you don’t want them to run up any more debt for the U.S.A. Period.