Let’S Bail Out Main Street Instead Of Wall Street

Let’s aid Main Street, rather than the Wall Street suits whose wild spending and incompetence helped to break the banks. Let’s Bail Out Main Street Instead Of Wall StreetBy Cliff Montgomery – Sept. 29th, 2008In a shocking vote which rattled markets worldwide, the House today rejected Bush’s $700 billion bailout of America’s mis-managed financial institutions, despite warnings from both the White House and party leaders in Congress that the U.S. economy may shatter without it.Even before the House’s 228-205 rejection was final, the Dow Jones industrials dove almost 800 points. The free-fall was the largest plunge ever in a single day for the Dow Jones, beating the previous record of 721 points, set on the first day of trading after the Sept. 11th, 2001, terror attacks.Congressional leaders from both parties promised to try again, although Democrats say GOP congresspeople need to bring in more votes. The Bush White House, apparently shocked by this turn of events, didn’t seem completely sure what it would do next.For its part, the House is slated to reconvene this Thursday and cancel its planned adjournment for the year.”Everyone [on Capitol Hill] knows something has to be done, but they don’t want to take the hit if everything blows up,” Dennis Goldford , a political science professor at Drake University in Des Moines, Iowa, told McClatchy Newspapers earlier today.Regardless of party, members of Congress tell McClatchy Newspapers that phone calls and e-mail from rightly outraged citizens have overwhelmingly declared one thing: Don’t even think of making this a simple bailout for executives on Wall Street.Our view? Perhaps the bailout should center on aiding Main Street, rather than the Wall Street suits whose wild spending and incompetence helped to break the banks.Here’s The Spark’s essential notion, which was first put forth by David Sirota, writing for The Huffington Post:”There is the idea of…taking the $700 billion and simply [giving] it to struggling homeowners to help them pay off part of their mortgages.”This hasn’t even been discussed–but the thought experiment it involves is important to understanding why there is, indeed, an alternative to the Paulson plan.”If the root of this problem is people not being able to pay off their mortgages, and those defaults then devaluing banks’ mortgage-backed assets,” continued Sirota, “then simply helping people pay their mortgages would preserve the value of the mortgage-backed assets and recharge the market with liquidity.”That would be a bottom-up solution helping the mass public, rather than a top-down move helping only financial industry executives.”As Sirota hints, the fact that this simple, clear plan has not even been seriously considered by either party in Congress–or by anyone in the corporate media–speaks volumes about why we are in this mess.A fine article by Nobel laureate and Columbia University economics professor Joseph Stiglitz, which appeared in the December 2007 edition of Vanity Fair, gave the reasons for this economic meltdown almost a year ago:”A tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent,” by the time George W. Bush leaves office, not to mention “a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been,” stated Stiglitz, and “a dollar so weak that for an American to buy a cup of coffee in London or Paris” has essentially become “a venture in high finance.”And that’s not all. The Nobel laureate in economics added that, “the United States [also] is less prepared than ever to face the future.”We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India,” wrote Stiglitz.”We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century,” declared the Nobel laureate.”And although the president now understands—or so he says—that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.”Up to now,” Stiglitz continued, “the conventional wisdom has been that Herbert Hoover, whose policies aggravated the Great Depression,” was probably the ‘worst president’ in economic matters.”Once Franklin Roosevelt assumed office and reversed Hoover’s policies, the country began to recover,” Stiglitz pointed out.But, he added, “the economic effects of [George W.] Bush’s presidency are more insidious than those of Hoover, harder to reverse, and likely to be longer-lasting.”Like what you’re reading so far? Then why not order a full year (52 issues) of thee-newsletter for only $15? A major article covering an story not being told in the Corporate Press will be delivered to your email every Monday morning for a full year, for less than 30 cents an issue. Order Now!