Sheila Bair, a former chairman of the FDIC, publishes a piece in Huffington Post (on 4/13/12) that is a snarky but excellent reminder of how our economic malaise was organized by the likes of Bernanke and Blankfein, and a suggestion that what is good for the 1% goose, should be good for the 99% gander:
Let's give everyone a ten million dollar loan!!! suggests Bair. Financial crisis solved! Bair explains how it would work, after the jump:
http://www.huffingtonpost.com/...
Fix income inequality with $10 million loans for everyone!
By Sheila Bair
"Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy", opens Bair.
"For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them.
So why not let everyone participate?"
Indeed, why not?
"Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)"
Certainly, the last thing the 99% would want to do is get greedy--- given that the market in greed has been nicely cornered by the 1% for over a decade now...
"Of course, we will have to persuade Congress to pass a law authorizing all this Fed lending, but that shouldn’t be hard. Congress is really good at spending money, so long as lawmakers don’t have to come up with a way to pay for it. Just look at the way the Democrats agreed to extend the Bush tax cuts if the Republicans agreed to cut Social Security taxes and extend unemployment benefits. Who says bipartisanship is dead?
And while that deal blew bigger holes in the deficit, my proposal won’t cost taxpayers anything because the Fed is just going to print the money. All we need is about $1,200 trillion, or $10 million for 120 million households. We will all cross our hearts and promise to pay the money back in full after 10 years so the Fed won’t lose any dough."
That's basically the same kind of deal the banks and finance companies gave the government during TARP and the bank bailouts, isn't it? Secret sweetheart trillion dollar payouts the details of which were closed to the taxpayers footing the bill, who were told to trust the banks and corporations to pay it back.
"Because we will be making money in basically the same way as hedge fund managers, we should have to pay only 15 percent in taxes, just like they do. And since we will be earning money through investments, not work, we won’t have to pay Social Security taxes or Medicare premiums. That means no more money will go into these programs, but so what? No one will need them anymore, with all the cash we’ll be raking in thanks to our cheap loans from the Fed."
Bair has just exposed the secret to thinking like a 1%-er: when you rake in tons of cash that you get nearly free from sweetheart deals and low tax rates, it's easy to think that federal assistance programs should be abolished. After all, you don't need them, so why should anyone else?
"Come to think of it, by getting rid of work, we can eliminate a lot of government programs. For instance, who needs unemployment benefits and job retraining when everyone has joined the investor class? And forget the trade deficit. Heck, we want those foreign workers to keep providing us with goods and services.
We can stop worrying about education, too. Who needs to understand the value of pi or the history of civilization when all you have to do to make a living is order up a few trades? Let the kids stay home with us. They can play video games while we pop bonbons and watch the soaps and talk shows. The liberals will love this plan because it reduces income inequality; the conservatives will love it because it promotes family time."
What an amazing economic recovery plan! It covers all the bases: family values, reduction of income inequality, get rich quick, freedom, and opportunity society!!
"Some may worry about inflation and long-term stability under my proposal. I say they lack faith in our country....This is America. Why should hedge funds and big financial institutions get all the goodies?"
Indeed! Or more to the point: why can't the federal government give individuals the same opportunity it provides groups like Bain, or AIG, or Goldman Sachs--- that is, the opportunity to do large-scale trading in debt, and to receive large-scale tax breaks? What makes hedge funds and big financial institutions so special? Every American should be able to make the choices these institutions make!