Sunday, September 21, 2008

Saratoga Springs, the Civil War and the bailout

It's a beautiful day in Saratoga Springs. The city is a beehive of activity. There is a Civil War encampment in Congress Park. The Civil War was such a massacre....over 600,000 deaths, I believe. Does anyone believe Lincoln could have avoided this civil war? Speaking of experience, Lincoln had less Washington experience than Obama.
There is a running marathon in the city. I wish I could walk a mile, let alone run.--------------------------------The Feds. are going to borrow, or print, $750 billion early next week. That's in addition to Bear Sterns-$24b;Fannie and Freddie-$200b;AIG-$85; and other bailouts totaling $400 billion. A trillion here, a trillion there. Pretty soon it begins to add up.
Our buddy, neighboring Vt. Senator Bernie Sanders, has some suggestions on this bailout, some very cogent:
"..a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;
b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and
c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies' stock goes up.
(2) There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect working families from the difficult times they are experiencing. We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.
(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999. That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.
(4) We must end the danger posed by companies that are "too big too fail," that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation's largest depository institution, has absorbed Countrywide, the nation's largest mortgage lender, and Merrill Lynch, the nation's largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy. ...."

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