$700,000,000,000.00!
Now, that's an amazing number, representing a huge amount of revenue.
Consider:
The National Football League operates franchises in 31 U. S. cities (New York has two teams).
If you divided the funds being suggested for the latest phase of the financial markets rescue plan, you could send $22.6 billion to each of these cities for use in strengthening local economies, redeveloping aged infrastructure, improving public education, expanding higher education, promoting new employment skills development, restructuring doomed individual home mortgages, developing housing for the poor and homeless, addressing the national health care crisis at the local level, just to mention a few of the obvious needs facing all of our major urban areas. Or, you could divide the funds up based on population. I mean, Dallas likely needs more than Green Bay!
If you include the funding previously committed to the current "bail out" actions by the Treasury Department and the Federal Reserve Bank, the number climbs to $1 trillion, increasing the available investment capital for our major cities to approximately $32.25 billion each!
The entire operations budget for the City of Dallas is about $2.6 billion or just a little over 1/10 of the smaller amount.
It appears that something must and will be done to stabilize the credit markets.
However, a simple giveaway to the big Wall Street firms and banks without clear and careful attention to the needs of all of our people, especially in the inner cities of America will prove to be a colossal failure that could spell an even worse fate for our national economy. Any plan worth its salt will go beyond simple "oversight" concerns or guarantees of limits to executive pay and severance packages.
Since 1980, our cities have suffered the ill effects of "trickle down" economic theory. You know, what benefits the very top will eventually serve and stimulate the bottom. In my view such theory is upside down. Stimulate that which serves the local, those enterprises, institutions, and corporations working close to the streets, and everyone does better.
Due to a failed system, the credit markets likely should be stabilized or taken over. Along with that, any worthwhile plan must not forget the folks back home who are in danger of losing everything.
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8 comments:
That's $2.6 million per person for Green Bay, WI, which has only a little bit over 100,000 people.
I suppose a little less after I move there to get my share--maybe $2.5 million!
I know I'm a little slow when it comes to understanding how our economy works...but it befuddles me as I try to figure out how we have billions of dollars to spend on a war...billions of dollars to bail out major companies... but "no" money.
As a result of having "no" money we are told we must make cutbacks on things like education, jobs programs, and financial aid for college. From an educator's perspective, it seems like strengthening our root (i.e. our children and educational system) would allow us to develop a higher level of education for our future to help us solve these crises that we keep running into. Or, who knows, maybe if we really focused on using all of that money that we "don't have" on teaching critical thinking skills (instead of consumerism) to strengthen our economy, our children of the future would be educated enough not to get us into these situations in the first place!
The issue here, Janet, is of course what makes a "crisis." While you may personally know kids who can't afford higher education and have to settle for lower paying jobs, that issue is not seen as a "crisis." When a family simply stagnates, that's just life. When Lehman Bros., et al, are about to fold, that's a "crisis," and no amount of money is too much to fix the problem. That's just the way Washington works.
This "bailout" involves the Gov buying nonperforming mortgages from banks. The Gov is not just handing out free money(fingers crossed) they way it does with some of its spending.
The assets will be purchased at a discount, not face value. The banks will still take a huge hit, but this way it won't be fatal, hopefully.
It was interesting to notice the President's speech last night. He kept focusing on the people who bought above their means and speculated by these houses. He said almost nothing about the lenders engaging in incredibly risky practices. I now have mixed feelings about the need for a bailout. Yes, there is a potential for government to make money in this (i.e. when Clinton lent money to Mexico), but it seems very risky this time around.
I agree with Janet. We seem to have a way of creating a crisis when we need money for something, but we neglect some pretty important problems in our society.
If I had a vote, I'd vote "no" on the bailout. They gambled - with other people's money. We don't get the opportunity of having someone bail us out when we make foolish decisions.
Yeah, gotta love that "trickle down" theory.
It seems to be a good thing when it benefits the rich, but they refer to it as welfare when it's for the folks that really need it. MAKES ME SICK!
Larry, excellent post.
Why don't we vote out all the incumbents this year? I mean, every single one of them! A clean sweep -- a mini revolution! Let's see what some new folks can do.
But sadly, we won't do it. We all complain about the government, but then refuse to do anything about it.
I'm against every bailout proposal that's surfaced to date - but I don't think you grasp where the $700b goes at all.
Like a c hand mentions it will be exchanged for questionable paper at a discount - of course not as steep of a discount as it would be if privately purchased.
That gap of value - between what a private investor would pay to get maximum value and minimum risk and what the government will pay to keep selling banks solvent IS indeed a giveaway.
For this giveaway - all banks involved should lose all equity - which has no impact on their solvency and ability to lend - which I haven't seen on the table yet.
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