Perhaps the shadiest aspect of this unfolding "bailout" saga is the clarity of its existence juxtaposed against the vagueness of any direct benefit to the common good. Notice the convenient lull of an election -- now transition soap opera -- interruption which temporarily stuffs it behind campaign cholic, giving it just enough time to simmer. We're now in the normalcy-of-crisis mode. We didn't forget about it, but it dropped a few notches on the priority totem pole since we've been a bit entranced by the election of firsts, curled into the sleep that is pop culture and our daily grind.
Still, with it rearing its unforgivably ugly head -- a jobless claims rise with volatile fluctuations in the market -- the euphoria of the election is cooling a bit, the expectations mounting on the new president to deliver something, even if he's still in transition.
Thing is, our mad cool-elect (confidently strutting like modern Shaft aside the lame-duck during his recent White House tour) doesn't want to claim this mess just yet, preferring to let the current "decider" ride out the full length of his legacy. Refusing to attend the G20 summit "send off," he opts for the incessant speculation and sprung leak distractions of possible cabinet picks, taking the transition in calm stride. He'll have enough to worry about on January 20th.
Of great concern is the way in which the bailout seems designed to avoid any focus on what we always thought were the economic fundamentals -- or at least what they force fed some of us during college indoctrination. But, check how it fakes any acknowledgment of mass consumerism, small business and manufacturing as core support systems. "The banks can do it, slick," is the resounding mood of the current Administration, their version of "socialism" soaked with laissez faire and hook-up. "Bailout" seems such a played and trite term -- much like "flip flop" is or any of those other pop 10 favorite news sound bites that never give you the full context of what's up. Cats are getting hooked up, fam ... in a fairly big and ostentatious way. Translated: we're getting played.
One can easily bristle and shoot back with "Well -- do you have any other ideas?" That's the rock and a hard place question. And we can probably talk till we're purple over the traditional friction -- as old as the country itself -- between banking and old fashioned manufacturing. And while the banking and insurance institutions appear to hoard taxpayer cash for the long haul of low confidence, core industries such as auto are on the brink of going belly-up, risking the fate of 3 million plus gigs.
But, if you bailout... (cough) excuse me -- hook up -- the "Big 3" autos (who could never seem to catch up with competitors), where does it stop?
Not professing any kind of expertise on economics, friend, but we can (at least) agree on the basics: that we've been sucked into a sucker's conundrum whereby three quarters of the economy is driven by consumer spending. Simply put: we can't stop buying. Our survival depends on it. The lack of spending will only continue to show in the worst way.
So, let's admit, a reasonable "big idea" alternative to the "bailout" plan is in short supply. Our imagination these days only goes so far as what fixes we can buy ourselves out of. In desperate times we reach only for the most desperate of measures: more money. Should that mean we lose all sense of common sense?
This might be a ripe time to recalibrate our collective social construct on the subject. The time for a balance. In reaching this point of instant gratification with no investment, we've seriously compromised our ability to innovate and build. What else explains the rationale that saving the banks first is the key? Forget any ambitious plan to revise research and development or a mission to completely resuscitate American education.
On the real: why not? Crises, historically, also bring out the best and brightest in the human collective, and there is a hidden, yet gem of an opportunity to bring back the ingenuity that has defined the best moments in American history. Perhaps we pull back on this now embedded reliance on accumulated credit and debt, and instead focus on a fresh age of vocation mixed with intellectual, technological and manufacturing enlightenment. Even as the economy sputters, there is also this Science-channel inspired, HGTV-backed "DIY" or "do-it-yourself" movement on parallel resurgence. Simply, more of us appear inclined to do the "dirty work" by either making it or repairing it ourselves. Why this is a fad rather than the norm it once was escapes some.
Beyond that, it's also a key to renewed interest in and hope for reviving national education. Or, perhaps transforming it into something other than a mad rush to comply with standardized testing requirements. The president-elect already expresses distaste for the television viewing habits of our youth and we stare back as if stupid to what that means. What it could mean is a renewed focus on putting our national minds and hands back to work, re-crafting public education with a focus on vocational education and specialized sector schools designed for students with specific interests and talents. Throw in small-to-large business sponsorships and internships for high school kids, and perhaps a long-term funding stream for health care drawn from sales of product. Why not take those school woodshop classes to the next level? What's stopping high schools from creating early architecture, engineering or environmental science incubators and using those as platforms for core industries? Here we might find the foundation for a new economy, professionalizing our youth in preparation for tomorrow's economic and environmental challenges. Mixed in with compulsory financial literacy and civics K through 12, it may not be so much of a "New Deal" as it would be a sense of national commitment and community service. And we might actually save quite a few cities along the way.
Follow Charles D. Ellison on Twitter: www.twitter.com/charlesdellison
Hale "Bonddad" Stewart: The Myth of the Black Swan
This is the third time that I have been through an economic event where there were groups of people who said the old methods of analysis didn't apply. As I will demonstrate, nothing could be farther from the truth.
Since nobody's buying cars these days, the $25 bn bailout would only maintain the companies on life support until the market returns - or, more likely, since it will take quite a while for the market to return, it will be the first of many such bailouts.
If we have to pay continuously to keep the American auto industry alive, why not just nationalize it? That way it can be improved with all that money instead of just treating water. If Obama uses his usual vetting process to select government officials to run the auto industry, we have at least a decent chance of winding up with someone in charge who has the national interest in mind.
That goes for everyone else who wants a bailout, too. The stock market will tank, but we'll be better off in the end, and ultimately the nationalization can be reversed.
A little history for you: During the 30s there were several years where there were 5000 bank failures per year. No deposit insurance until Glass Steagall 1934. With banks failing at this rate everyone pulled deposits out of the banks. No deposits, no ability to loan. No "credit" (loans) no economic activity. Ergo, 33% unemployment. This is the history and the boys do not want its repeat.
Banks turn out to be the circulatory system of the economy. This is why the banks are first and foremost. Paulson is Treasury and Uncle Ben is banking. They have no interest in autos, pharmacy, or farming. The confederate senators (shelby et al) want the domestic union car business to die so that their states can attract more auto investment. It is the legacy of the south, the disregard for the worker which springs eternal since the days of slavery.
Think about this a second...what would happen if 5000 banks failed in this country 2009 and then again in 2010? Pretty sobering thought, eh?
First, thank you for turning this conversation back to the topic of fiscal responsibility.
Second, no financial institution in their right mind would ever "give away" money to a debtor without first vetting their financial solvency. I don't understand how politics work, but I am speechless that the government continues to entertain just "handing over" money without first reviewing the company's books. Who's to say that there isn't a way for these companies to remain soluble? We've seen millions of dollars of bonuses and perks that still remain after the money is given, yet they're broke? Insurance companies -- reputedly the richest in the world -- have nothing?
Instead, I propose that if a company wants to dig into Uncle Sam's pockets, they agree to an audit by an independent source that provides recommendations to the company. So, if GM is in that big of trouble, have an independent audit company look at their books (and if I recall, they have more than one set for taxes and shareholders) to see if there are ways to rearrange their finances. Let the company decide what works best for them then -- on the basis of that audit -- provide the terms of a "loan" not a handout.
Simply throwing around money isn't going to help anyone in the long-term, only the sharing of knowledge will. Maybe then our companies will stop planning for the short-term and start thinking more about those "what if" scenarios.
To stabilize the Real Estate, consideration should be given to making the STATE PROPERTY taxes a total TAX CREDIT up to $5000 per individual and $7500 per couple and $10,000 for family, this money will then go to people who are at risk... Then we also do the same for the Mortgage Interest... This can be funded by rescinding the BUSH TAX CUTS for the wealthy... and increase the taxes on the wealthy on their incomes, socallled business expenses and bonuses and pensions...
(a) Salary caps written into their articles of incorporation AND into the terms of the loan -- executive pay rises above (say) 25 times the salary of the janitor, and the entire loan is due immediately with interest and penalties.
(b) If benefits which unroll in the future (such as pensions) are going to be allotted to employees, then those benefits must be funded in advance through investments which come from the company but are managed by the employees collectively, rather than by the company management -- result: no raids on the pension fund to pay for management bonuses, and no bogus complaints from the right wing about how "UAW is bankrupting the new big 3" in twenty years
(c) No sales, production, or support jobs outsourced overseas unless they are starting a branch to sell cars overseas.
(d) No lobbying against efficiency standards. Ever.