From The Peanut Gallery

Noticed in blog comments somewhere ...

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Despite last week, these events will unfold slowly, over months.

The bailouts last week are nothing but bailouts for Wall Street. The problem of over-indebtedness
remains throughout the land.

If Washington really wanted to help the country, that $700 Billion would be directed to helping families stay in their homes and keep paying their restructured mortgages.

Then, and only then, will value return to the mortgage paper on Wall Street. The question is, how much of that paper was based on fraud, condo flippers, vacation homes, second homes and "investors"??

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That - all the speculative money "created" by flipping and fraud - is what drove mortgage marketers', financiers' and bankers' bonuses (bonii ? boners ?) and that is what should NOT be "bailed out".  And that is what royally pisses off the average jane and joe, or at least those who understand what is going on

Joe Bageant wondered, in a response to one of his readers, whether the $700 billion should just be distributed evenly amongst all citizens of the USA, who could then use the money they receive to pay mortgages, spend, reduce debt, etc. - but clearly that would be a massive stimulus to the economy.

Here's the story, and the exchanges between him and two 'experts:

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No one is looking out for your interests

[ Snip ... ]

I had the repugnant experience of talking to two economists a couple of days ago, one an international financier, and the other a wealthy developer with a master's degree in economics (who appears in my book.).

I posed this question to both:

What if we took the bail-out money and paid off every college loan, every credit card, every pending foreclosure and every mortgage in arrears, and every unpaid hospital bill? Wouldn't that free up a lot of income to stimulate our economy, 70% of which is based on Americans consuming good, services and commodities? Wouldn't it be better to have the money circulating, stimulating the U.S. economy than stashed in overseas as accounts? If Bush's little $250 rebate propped up the national economy for a couple of months, wouldn't distributing the $700 billion push the economy into the stratosphere? What if we used it to pay down the national debt? Wouldn't the American dollar reverse its plunge? At the very least for the first time in 80 years Americans would actually owe the debt to themselves, not the unseen financial lords.

The international financier said: "It just cannot be done. The financial machinery of our free market economy would fall apart. Then we'd be in worse shape than ever."

"How's that? It seems like it's already fallen apart. Been turned into a swindler's paradise, with the swindlers now asking that all future productivity of Americans be signed over to them, since there's nothing left to steal at the moment."

"It simply cannot be done. Nor should such socialism ever be allowed. It's a ridiculous idea."

The economist developer, when asked the same question, "Why not bail out the American people, instead of the fat cats?" was more honest:

"Doing that would have unintentional consequences.'

"Like what? You're an economist, so tell me."

"Well, I don't know. That's why they are called unintentional."

"So why should the American public be perpetually and increasingly in debt?"

"Because debt is the source of American wealth."

"Wealth for whom?"

"Obviously for those who understand the system and have the know how to use it to its best purpose for all concerned."

"Won't that devalue the dollar over time?"

"Sure, but if you've got enough dollars it doesn't matter. Look at how African dictators live, despite that their nations' currency is worthless."

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