DAS Blog

I know it's a little late for this ... and hindsight is 20/20. But I'm not being paid to think up these sorts of things! If I could think of this now, how come the best "prognosticators" couldn't think of this when the time was ripe for it?

Now onto the show:

(1) The government should eat what Atrios calls big shitpile. But not in the way they have done so. Instead the purchases should have cut out the fertilizer sales agencies that too many of our banks have become. People (in pension funds, retirement plans, etc.) are loosing their future because they've invested in "oh so safe mortgage backed securities"? Government should buy big shitpile directly from the true owners of said fertilizer tower.

(2) Bail out state and local governments (with the condition that their endemic corruption -- which BTW helps the GOP politically by souring people on government, as I've addressed here and elsewhere -- be curtailed) so we don't have to have service cuts (which translates to even fewer people working and hence even more economic shrinkage) and tax increases when we can least afford them.

(3) Now onto the substantive changes -- deal with the Social Security crisis. No. Not the one manufactured by hucksters trying to get more people to "invest" in a market that, with investors just buying stock from each other without regard to what they get from the stock and with investors buying IPOs from underwear gnomes, has become a Ponzi scheme dwarfing Madoff's scheme. I mean the concept. Bubble collapses have destroyed the economy? Well what fuels these bubbles in the first place? People who figure they need to "invest" in order to have the retirement they've earned. If we had a real system of social security, people would get back to saving for retirement, and we wouldn't have so many bubbles.

(4) For that matter, we really need to bring back the New Deal. Is it any coincidence that, as the GOP has eviscerated the New Deal, we've been sliding back into a pre-FDR economy of business cycles with disastrous panics, depressions and recessions?

(5) If we insist on having mortgages be investments (moving away from the "It's a Wonderful Life" paradigm of "Joe's money is in Suzy's house"), we should, well, make them investments ... with risk! (and, c.f. point #3, people shouldn't be dependent on investments for retirement income.) We should institute mortgages in compliance with Biblical (of course the religious right will support this ... do I hear support from anyone? Warren? anyone?) and Talmudic law -- if the price of the house goes down, the investor eats it and not the homeowner.

(6) Finally (or perhaps I will think of more), we gotta do something about the price of housing. As the price of housing increased faster than the economy as a whole grew, it served as a Ponzi scheme (again dwarfing Madoff's) in which you could borrow against your house, etc., and someone would pay even more money to you to sell it to them. Eventually, the scheme has to collapse leaving a bunch of people owing money in mortgages they can no longer afford because no one will buy the house. Meanwhile, as housing prices increased faster than inflation and wages as a whole, this means that, where in my parents' day, a family of four could afford to live in a three bedroom home, in our day on the equivalent salary, one can only afford a one bedroom apartment!

People say "those borrowers should have limitted themselves to housing they could afford"? What affordable housing? We need to let the housing market really collapse ($300K to live in a floodplain in NJ? I don't care if it's in Wayne). The problem is that if the market collapses, Joe and Jane Homeowner will be left holding the bag. How can we subsidize people who loose big to sell homes for bargain basement prices so housing will become affordable again?

Obama says he wants to restore the American Dream? Well, perhaps he should, to the extent that it is still possible, adopt DAS Blog Plan, and allow people to crawl out from under their debts and into decent, affordable housing with full security and no need to fear anything but fear itself? If Obama wants to be FDR, he's gonna have to ditch the "neo-liberal" Geithners and Summerseses of his admin and start thinking like the real Democrat the GOoPers were afraid he was going to be!