Wednesday, September 24, 2008

Ideas that Irritate the Wealthy

So, with all of this subprime meltdown, insurance policies that cover nothing, bankers letting themselves be swindled, consumers being swindled by unscrupulous mortgage brokers, and so on and so on, what does one do?

First off, write your senator/congresscritter, preferably through the real mail, with a real letter (NOT form letters - they don't read them), or you can always call - the messages you leave with the congresscritter's aide will be passed on. Tell them that this contingency plan that they've been ready with for months (not just slapped together over the weekend like we all thought) is no damn good, and we shouldn't have to cover poor business practices or lapses in ethics. If they get to keep the profits, then they should have to cover their losses as well. If the banks are too big to fail, then they should be broken up into smaller companies so that individual portions can fail should they do something stupid.

In this case, the stupid was spread around pretty heavily, and everyone seems to have caught some of their own personal version of stupid.

Bernie Sanders (Socialist, VT - I love a good socialist in times of capitalism's failure to perform to spec) has suggested we do two things: first is the one I mentioned above, break up the banks that are so large their failure equals the collapse of American finance as we know it; the other suggestion is to impose a 10% surtax on individuals with take home pay greater than $500,000, or couples with take home pay greater than $1,000,000. They benefited from this disaster, they should pay. I don't really disagree with either of these ideas.

Another idea came from the Thom Hartmann program on Air America this morning: return the %0.25 per stock purchase tax that was discontinued in 1966. Used to be there to fund the SEC, but as the income from this tax was exceeding the operating costs of the SEC by a factor of about ten, LBJ and the congress decided to end it, and roll the SEC budget into the general fund.

Two reasons to do this: might slow the speculators down if they have to report every single trade to the IRS; it would bring in potentially billions per year. The London Stock Exchange has been doing this for a long time and is prosperous enough to attract buyers like the NASDAQ.

Above all, none of this $700,000,000,000 bailout crap - no private profits with socialized losses.

1 comment:

Erik Hermansen said...

The thing that is bugging me about this is how hard it is to have a solid opinion on what should be done based on a layman's knowledge of economics.

Things that are more or less clear to me:

* A bunch of people got loans who ought not have.

* I don't want the fockers responsible for this to benefit from it. Out of principle, but also in defense of a working system of incentives.

* I don't trust congress to pull an all-weekend cram session to throw a solution together. Even if McCain graces the Senate with his leadership. You don't spend $700 billion in a panic. I've heard various figures, but that works out to at least $7000 additional tax burden per family.

Things I don't know that seem very difficult to learn (maybe the OBL can help):

* If we didn't bail anybody out, would it really be that hard to recover? I often wonder if the follow-on consequences are overstated because people at these failing companies hold too much influence over government officials. (By the way, a starting point would be to make certain the follow-on consequences are at least worse than adding a freaking $7000 additional tax burden per family.)

* Where do you draw the line on regulation? Nobody wants to be Freddie/Fannie's bitch, but when you talk about breaking up companies, nationalizing, etc. at SOME POINT less people will want to get into banking and less money will flow into the economy: we can't get a home loan, we won't start that business, we won't get that new job, etc.

-Erik "Responsible Apartment-Dweller" Hermansen