Defuse the Rage: How to Sell the Bailout Plan

Here's what must be said to the American people.

"For a long time there have been two economies in America -- the Elite Economy and the Everyday Economy.

Let me define the Elite Economy for you, because it might not be what you think. It isn't all of Wall Street, or banks in general. It's not the people who lend money to small businesspeople to help them get started, or who lend to farmers to get them from spring through harvest.

By contrast, the Elite Economy consists of the traders, the packagers, the creators of the chimerical.

They have a parasitic relationship with the economy -- adding nothing, bringing nothing, merely sucking blood from the host. Namely: us.

The people who are largely responsible for our current economic crisis were all prime actors in the Elite Economy.

The truth is that Elite Economy has one objective -- to generate profits for itself. Sometimes that relentless mission benefited the people in the Everyday Economy, or at least superficially and temporarily did. For example...when there were profits to be made by extending credit to people who really couldn't afford their houses. As long as those mortgages could be chopped up, packaged up, and sold, their argument was -- repeat was -- that everybody won.

But make no mistake. The people pulling the strings of the Elite Economy have no munificence flowing in their veins. They can't sit back at the end of the day and say, "I helped this business get started and now it's expanding into Europe" or "I helped this company get through a rough patch and now it employs 150 people." They had no interest whatsoever in spreading the glories of home ownership and the American dream to more people out of any motivation beyond pure greed.

At the same time, though, much of what went on in the Elite Economy didn't really touch the Everyday Economy. Foreign exchange traders would toss tens of millions over the global net every day, leveraging a few basis points into seven-figure salaries and huge trading profits for their now logo-less firms.

But until recently, none of that really changed the underlying direction of global finance, never had an impact on the Everyday Economy -- the small business owner, the farmer, even the high-tech entrepreneur.

After all, even the most aggressive defenders of Wall Street would agree: traders don't change fundamentals, they just make money by being smart enough to spot pricing anomalies before the free market catches up, adjusts, and eliminates inefficiencies. That's the argument, after all, that hedge funds give when they maintain that speculation didn't drive up the price of oil. )And for the most part, they're right.)

What's happening now, though, is that the Elite Economy has come crashing into the Everyday Economy. Complex concepts like collateralized debt obligations and credit default swaps suddenly matter to everyone. These glitzy baubles that were packaged up as alluringly as the Prada boxes that streamed out of Barney's are now poised to choke credit, devalue savings, and cause an economic aneurysm.

So now, the Elite Economy -- who scorned the schmucks and schleppers in the Everyday Economy -- are now stuck in the lifeboat with them. It's like a Hollywood movie when a building collapses, and the crooked contractor who used substandard steel in the skyscraper is trapped in an elevator with the maintenance man. Suddenly, each needs the other to escape and survive.

I understand how infuriating it is to be in that position. I know that you're completely suspicious of the Elite Economy and anything they have to say. They've never cared about the Everyday Economy, and in fact, did what they could to make money at its expense. And here they are, expensive hat in manicured hand, asking for a handout from the same people who they've scorned for years.

So yes, I understand your rage at the likelihood of your money going to fund a bailout that will further enrich the Elite Economy. Especially since the people who will help the Treasury department run its new business -- billions of toxic mortgages -- will largely be the same people who put us in this glorious mess.

But you need to channel your anger in a different way. Don't channel it at the bailout, or the rescue plan. We need that, or millions of everyday people who lives and families make up the fabric of the Everyday Economy will suffer in ways they haven't even contemplated yet.

We need to get this plan approved by Congress and then turn our attention to the Elite Economy. We need to ask ourselves how it ended up in a position to cripple our economy and our future. And it's more than a simple matter of "more regulation." Yes, we turned out watchdogs into lapdogs, but the problem is deeper than that. Our framework is broken.

For example, our tax code doesn't make a distinction between someone who earns a dollar by lending money to the entrepreneur or farmer, and someone who earns a dollar by finding a sliver of inconsistency between the yen and the Euro, and borrowing 30 times that sliver to turn it into the twinkling of an eye?

Is that right? I don't think it is. We should use our tax code to encourage the right kind of behavior, corporate actions that benefit the greater good. We need more money flowing into our economy to help it grow, and less money shuttling from one computer terminal to another, betting on tiny burps in the global financial system.

We need to make the Elite Economy work for the Everyday Economy. It can and it must, but before that can happen, we need to get both economies out of the lifeboat.

Comments

[auntiegrav]

We are way beyond torches and pitchforks here. Time to wander home, chat with our friends, go back to bed, and tomorrow morning, plant the garden and grow our own future. The Elite economy sucked us in, making us believe we were all part of the Victorian estate, able to steal resources and money from the rest of the world to support our leisurely lifestyles of cars and boats and beautiful homes with paid servants (oil and gas) to do our every whim for us.
Now, we have to start working for ourselves, our children, our communities. We don't have to borrow money to do it.
If you want real Change, keep it in your pocket. No matter who you vote for now, the fascist government always gets it. The Greeks knew it as the inevitable result of democracy: reversion to the Mean.

"McCain-Pa­lin...beca­use Mean and Stupid have worked so well for 60 years, why stop now?"

[Maxiesid]

Washington, the pundits and the people that are going to be hurting - the Elite economy - doesn't understand a thing about anyone in the everyday economy, they think they will just re-explain it and we will all be sufficiently cowed and fearful and we will say okay whatever you want. Well, let me use your example to try to explain it to you - Now that the elite economy and the everyday economy are in the same lifeboat, what is being proposed, and we all know it, is when the rescue ship shows up, the elite economy will expect the everyday economy to let them get out first, they expect the everyday economy to allow them to stand on their shoulders to reach the rescuers, and will ask for more of a boost, once they are in the rescue vehicle they will stand and look down at the everyday economy and say... what? you think you need help to get out of there? You should have thought about that before you got in there... pull yourself up by your bootstraps!! The idea that the reason the people don't support the bailout is that we don't understand is wrong... we DO understand and we expect the same rules to be applied to the elite economy as is applied to the everyday economy. Put these people in jail that brought about this crises, fine them, take over their companies, and put regulations on how they can be run. Anything else is

[Schaz]

I really appreciated the comparison of the two economies. I only wish, in your argument for the bailout, that you'd managed to explain how the plan would not be of more benefit to the Elite Economy than to the Everyday Economy. I think there is a general perception that the rescue attempts will help the Elite, which "should" trickle down to the rest of us, and nothing I've seen is really convincing that the perception isn't valid. What I'm hearing from friends, family, co-workers, neighbors, is that the damage to the economy sucks and is kind of scary but they'd rather struggle through it than shore up the 1% who made the mess.

[myzenthing]

The only problem with your argument is that it'll never work. If we pass the bailout, Wall Street will still be their greedy old selves, and we'll have to pass another huge bailout package in six months or a year. You just can't keep rewarding these people for bad behavior and expect any kind of serious change in the way the economy is regulated.

[dgscol]

Whether the govt or the finance houses sell, the price will drop. You are correct that reform must happen, before any bailout. I think the banks should sell - they are better at that than the gov't - who tend to sell everything in large lots - all would go back to the banks.

[dgscol]

I am waiting for the price of housing to go down. Large supply, small demand = lower prices.
the way there is obvious - sell those mortgages to liquify the finance houses. People need affordable housing. This is why these mortgages were employed. Large principle, necessitates low interest, for affordability. The loss of good jobs that are outsourced to Asia, requires a drop in price to sell houses.
The longer this situation continues, the longer the problem continues. If responsible interest rates are charged, and responsible down payments are charged, then principles must decrease. That is our current economic situation. There is no other way.

Could a bailout and more of this irresponsible credit help anyone?