Okay, it looks like some kind of stimulus bill spending near a trillion dollars is going to be passed soon. This is necessary. Consumers have stopped consuming. (Or reduced consumption significantly.) Demand is down, so production slows, and jobs disappear. Government spending (as opposed tax cuts, BTW) is the surest way to stimulate demand and create jobs and so increase consumer spending and consumption.
But don't we need to consume less? Aside from the lost jobs, might not that be a good thing for environmental reasons? In the long run, yes; it's necessary. But better we make the adjustments to a more sustainable economy gradually or at least consciously, in big reform responses to shocks to the system like the current one. The miseries in terms of job loss and poverty visited upon the vulnerable by doing nothing ab the current crisis are not something I want to see. The press mentions the possibility of 10% unemployment w/ a shudder. I don't know how dire that'd be; I lived through 11% in the early '80s and I don't remember much looting and killing. But what would 20% (it was supposed to have reached 27% at the depth of the Depression, and unemployment statistics are notoriously known to be lowball)look like? Protests in the streets, to be sure. More crime and violence, undoubtably. Child hunger? Impoverished seniors? Increased homelessness. Etc.
We want to rebuild now, get people back to work and spending, w/ programs/projects that move us towards a sustainable, green economy. And government spending is the best way to get the job started. Right now, the only way.
What I don't get is how come in the partisan stimulus debate there has been virtually no discernable talk ab what's going to be done ab fixing the financial markets that started the collapse?
Last night all the talking heads, from both sides, were going on ab how "ordinary Americans" feel ab the stimulus package, desires for jobs and tax cuts, fears of big government and deficits, etc. Right, people want jobs and job security, they want to know that what they have is still going to be worth something tomorrow. But what's hanging over the stimulus debate is the fact that Wall Street, the very people who started this titanic mess, have already been given hundreds of billions of dollars w/out any accountability; w/out any indication that the bailout fixed anything; without any sense that the bankers get that their wreckless gambling w/ "other people's money" is "shameful," unacceptable.(See link.)People want to know that this is not the foxes guarding the hen house.
The right has for the moment gained traction w/ their own standby, accusing Obama's plan of fatcat Liberal spending. Under the circumstances the argument is beyond stupid, it's dangerous. But they've been able to do this largely, I think, b/c ordinary Americans don't get why banks are getting hundreds of billions of dollars w/ no strings attached while working people continue to lose their jobs and homes. Limiting CEO salaries seems like the right thing to do, apoligizing for nominating a guy who has been in bed w/ the industry he's supposed to bring under control, okay, but this is little more than defensive PR window dressing.
The first thing Franklin Roosevelt did during the Great Depression was shut down the banks and have them audited. Then he started the Federal Deposit Insurance Corporation which, basically, required banks to hold at all times some percentage of their deposits. This is widely understood as returning stability and trust in the banking system. Not coincientally the crux of the present catastrophe has a similar ring: "loan originators retain no residual risk for the loans they make, but collect substantial fees on loan issuance, which causes unchecked degradation of underwriting standards." (Wiki) Let people play w/ other people's money and they will eventually gamble it away. Obviously, we need some new rules, and credible, transparent, independent enforcement of those rules. But nothing substantial is being done.
Ordinary Americans may not understand tranches and CDO swaps but they know that the build up to the current economic catastrophe has been an insider's game. Obama's economic team is all insiders but he got elected, at least in part, b/c he promised to change the way the government does business in Washington, to uncouple the unhealthy relationship betw big business and politics. He has believers in ordinary Americans but he needs to convince Wall Street before he loses Main Street. Do so and old arguments ab liberal spending versus tax cuts, supposedly hanging up the stimulus bill will stop getting in the way.
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