Jon Stewart was promoting his stimulus plan last week, talking about how if it was up to him he would give all the money that was planned for the financial industry to homeowners so they could pay off their mortgages. There was a lot of opposition to that, as well as to Obama's Economic Stimulus plan which raised some questions. The primary question, of course, is why Paulson was given essentially a blank check and allowed to distribute funds as he saw fit to major contributors of the current crisis, consequence free, but President Obama has to fight tooth and nail for a package that would help the victims of the crisis. The answer is simple enough.
People forget that 70% of total tax revenue is collected from 20% of the taxpaying population. Although theoretically a democracy's decisions should not be affected by funding, the reality is every aspect of American society is pay-to-play. So when retards on Wall Street flushed money down the drain, most of it was money that belonged to the 20% of taxpaying Americans who keep the government running. To them, the financial bailout is a write-off on their losses - instead of giving their tax dollars to the maintenance of big government, they were redirecting those dollars to companies that held their portfolios. But an overall economic stimulus plan does not benefit them at all, and they have no real interest in getting it through. If Obama wants to help everybody, the rich says, he can do it without our help. That is why Republicans are constantly demanding tax-cuts. The less the rich have to pay in taxes, the less of their own wealth they would have to see go to other people's pockets. The United States of America can go to hell in a handbasket, but unless they could see direct benefits to themselves, that 20% of taxpayers are not interested in maintaining peace or infrastructure or health or standard of living.
I've also thought about the ramifications of Jon Stewart's idea and concluded it would not fly with our rich tax-paying overlords. Look at it this way; currently banks are holding assets in terms of properties that no-one can afford. Those banks are backed by investors who are taking a massive hit in their networth because of these devalued properties. But, as long as banks hold on to these properties, there is a chance the invstors can recoup their losses. If Obama succeeds in reversing the recession, demand for the properties can go back up. Also, the reason sub-prime mortgages were yielding great returns was because of the interest people were paying for property they couldn't afford. If homeowners were allowed to pay off their mortgages in one-fell swoop a huge amount of profits for both the banks and the invstors would vanish into thin air. Even a re-finance at low interest rates is more appealing than to allow home-buyers to actually own property. Thus, it is in the best interest of the rich to keep the comatose real estate market alive with cash transfusions and to hope the current administration and the democrats in charge turn things around.
No, no one in charge would ever consider giving money to the rapidly accelerating drove of homeless people. But, does that mean the idea has no merit? A good deal of public opposition to the idea has to do with the fact that no one wants to reward home-buyers for reckless behavior, that these poor peple deserve to be punished for spending well, well beyond their means. But does this idea have merit? Let's take a moment and assume the people who agreed to sub-prime mortgage loans knew what they were doing, that they were intentionally behaving recklessly and maliciously intending to screw banks over. This would mean that they took a look at the math, concluded that they would gladly and willingly give the banks everything they owned and all the money they made for thirty years to stay in a house that they did not own, with the caveat that if the banks did not think everything they made was enough, the banks could at any time kick them out. Digest this for a minute. Would hundreds of thousands of Americans intentionally agree to becoming indentured servants to banks, and sign away all hopes of financial security so they could sleep in a slightly bigger room? And would they also intentionally agree to become homeless it ever came to be that they could no longer afford to be indentured servants? "Excuse me, master, but I cannot harvest the exorbitant amount of cotton you demand, so please kick me in a ditch and abandon me with nothing except the shirt on my back." Fuck. That. Shit. More likely they were lied to and coerced into signing these mortgage agreements with no real understanding of the significance of their actions.
With this line of logic in mind, let's take a look at the banks' side of the issue. So home-buyers had no real understanding of what they were doing. Did the banks? There have been numerous reports of mortgage checkers coming out and telling their superiors the majority of the people who applied sub-prime loans had no real way of paying them back, that it was reckless and dangerous to approve the money, that it would be a disgusting lie to allow them the false notion that they can afford the homes that everyone said they wanted. It fell on deaf ears. After all, if these home-buyers were unable to pay the ridiculously high interest and mortgage payments, they could be kicked out and another sap could be found to take their place. Suck one dupe dry, foreclose on him/her, and sell to the next rube. What could be simpler?
In a just world, the bailout money would go to home-owners who are losing everything they own for over-priced properties. But we don't live in that world. We live in a world where the very richest amongst us is willing to play chicken with anarchy, knowing fully well that those more fully vested in society would salvage the situation before it turns to shit so they can keep staying rich. What I wouldn't give for more Michael Bloombergs in the world; people who are wealthy but also understand that his fortune does not separate or elevate him from the rest of society, and desires to ingratiate himself in the political arena instead of leaving it.
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