A Bailout We Don't Need--Jamie Galbraith

This is a copy of a letter that I have sent to Sen. Obama:
I agree with most of your policies, however I do not agree with any type of bailout for Wall Street because:
1. It will increase our national debt and make it harder to achieve the goals that you want during your term in office.
2. It will weaken the Dollar, cause inflation, and could hurt our credit rating.
3. It will not restore confidence. It will only show people how bad things are.
4. Our tax money should not be used in such a manner.
5. This problem manifested itself in the lower & middle class; and a bailout would be trying to repair it by giving money to the upper class.
I don't want to just complain without offering a potential solution. I suggest that instead of another stimulus package; that the $700 Billion be spent on GREEN Energy. Fill the empty abandon factories with workers making wind turbines, solar parts, electric cars, etc. This will create jobs; stimulate investments; and curb global warming. Lenders will be more likely to lend to these projects if the U.S. is involved. You could also sell "Energy Bonds" instead of war bonds. A free check from the government is nice, but the money doesn't go too far. People want to stand on their own two feet; not receive handouts. It would give people a sense of accomplishment; a common united cause. Once workers started making money, credit would once again free up. The problem with the bailout is that if it does not work, we are out of bullets! It could be the straw that broke the camel's back!
 

James K. Galbraith's suggestions are rational, and would be viable to eliminate the need for the bail out bill.

On the other hand, no economist ever got past examining the underlying relationship between the financial community and the consumer-production (real) economy. It's a marriage made in hell, and there has to be a divorce.

We take it for granted that the only way to capitalize things is through collateralization of assets in our economy and our nation, and we have to get the liquidity from the financial community.

Considering that the currency is backed by the productive capability of the population, there are many type of organization which would be superior to our financial community to take charge of monetization, including expanding the credit unions (depositors' owned banking), or cooperatives of people in communities.

It is absurd that that the only way to add liquidity to the economic system can only be done through borrowing from the financial community, and when all the existing assets are already monetized, and "there is no more new money," further monetization (additional liquidity) can only be done through government borrowing. In fact, the most logical method would be to monetize (create liquidity) that is necessary to supportable the productive capacity increase from year to year.

The real reason this is not even brought up as an alternative is because it would radically alter the balance of power between the population and the super-wealthy, and this is something they have not allowed for hundreds (maybe thousands) of years, and they will vigorously oppose it today.

Two possible reasons conventional economists don't bring it up is either because they've not thought outside the economic box they are trained into in college and MBA programs, or they have a vested interest in the status quo.

This idea has been discussed before, but taken off the table on specious basis, while the underlying reason is the protection of the power wielded by the financial community, servants of the super-wealthy.
 

The Time Has Come”
With my opologies to Lewis Carroll

While all of the Worlds’ financial markets burn, it has set me thinking. Long ago as a child I was asked to memorize “The Walrus and the Carpenter, by Lewis Carroll”, the words of the famous rhyme keep running through my head.” The Time has come, the Walrus said, To talk of many things: Of shoes..And ships and sealing wax—And why the sea is boiling hot—And weather pigs have wings.”
Rather a trite comment on the state of affairs we as the United States, and most of the rest of the world find ourselves in. It is time indeed to speak of many things, who will starve, who will commit suicide, who will have the money to feed their children, who won’t—who will still see a silver lining to an otherwise dismal state of affairs and who will only see more clouds in an already stormy black sky.
The world teeters on the brink of financial disaster…a loaf of bread here in the US costs on average $4.00, in India it is more than one days wages. The credit markets have dried up and the unsecured debts of ordinary people are astronomical, we have set up an entire society who depends on credit and has not a single idea how to live on what they earn.
Granted, this is some what everyone’s problem, but most importantly it is the problem of the working man or woman, we are the ones that will feel the crunch of this false economy. Having once been a business person I can tell you that most small business run on lines of credit, now that the reality of this economic crisis reaches the rest of the world we can clearly see that the inflated prices of physical property, homes and business has come home to roost and we see that nothings will ever be the same again. A house I once purchased for a mere $32,000 in the early 70’s sold last year again for half a million…any business person can tell you that that is an outrageous amount of money for a home that was originally built in the late 1930’s.
Any ordinary businessman would also tell you that while you may think that your grandmothers gold watch should be worth $1500 in reality it is only worth whatever the buyer is willing to pay.
How did we get to such a place, if you take the time to read Lewis Carroll’s Walrus piece you will see that we got here because we are a nation of followers. If person A pays $500,000 for a home that was built for $125,000 and person B follows that lead, soon we have an economy which is built on sand, lots and lots of sand. Unlike the Walrus, we can’t fathom a way to get seven maids with seven brooms to mop the sand away. What we got instead is a “Bailout” that really won’t do the job. We were as common Joe Six Pack American’s snookered! The trillion dollars of bailout cash won’t help, because the problem is systemic! Like a disease the United States became egregious the more we tried to keep up with the Jones the worse the problem became.
Now we are faced with grave concerns, we have come to the point where we must face the inevitable; we are going to be gobbled up like the oysters in the poem. Oh perhaps, not literally boiled in oil and eaten, but we will be gobbled up by the system that we created as each of us followed along believing the dream that things were ok, that property was indeed worth such outrageous prices, that every one could have a part of the American Dream Pie. We dear family, Joe Six Pack, are dinner just like the oysters in the Walrus, soon they…The powers that be will order up a loaf of bread, some vinegar and pepper and begin to feed on the bones of our financial fantasy!
Sadly just like the oysters we will have been ignorant of the facts! In the end of the poem the Walrus pretends sadness for the oysters, but when the Carpenter decides the walk is done and asks the oysters what they think…”the answer came there none—and this was scarcely odd because they’d eaten everyone!”
We dear public have been lied too, over and over again until we actually believed the lie, we took the bait right up to the last minute, we believed that the “Bailout” was good for everyone but especially for main street…alas now the tip of the truth begins to appear, the truth is that once again those who have the most win! Our economy and that of much of the world is in a serious decline and still the powers that be continue with the lie…”This is NOT a depression” one analyst said this morning, and “We are facing hard times ahead, but don’t worry Mr. and Mrs. Joe Six Pack, we are rushing that order for rose colored glasses, you should be receiving yours shortly in the mail for a small shipping fee of 700 Trillion dollars!