I can balance our checkbook. And that's how I like it: balanced. Where I know how much money we have, and that amount isn't less than the checks we've written.
Pretty simple. But somehow all those geniuses on Wall Street and in government can't figure out how to do the same thing.
They're used to spending more than they have. Under George Bush, we've had massive federal budget deficits. Not surprisingly, this charge it attitude has been reflected in the financial markets, where "take the money today and don't worry about tomorrow" has been the watchword.
This week's TIME magazine explains the monetary madness clearly in "The Price of Greed: How Financial Madness Overtook Wall Street."
But it doesn't pinpoint who is at the root of the problem. Recently my daughter told me about an article her Republican friends are throwing in her face. It's by Republican strategist Michael Reagan, and claims that Democrats are to blame.
Not true, according to a much more believable Daily Kos post, "Three Times is Enemy Action."
Yes, some Democrats were complicit in fostering deregulation during the Clinton years. The impetus for letting greed run wild, though, came from Republicans like Phil Gramm, one of John McCain's policy advisors.
So here we are, fellow American taxpayers, being asked to trade "cash for trash," as Paul Krugman puts it.
Some skeptics are calling Henry Paulson's $700 billion rescue plan for the U.S. financial system "cash for trash." Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.
There's justice in the gibes. Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers' money on behalf of a plan that, as far as I can see, doesn't make sense.
It sure doesn't.
A local Salem columnist got it right today when he said that Bush's proposed bailout privatizes profits and socializes risks. Meaning, all those financial types who screwed up get to keep their bonuses and high-paid jobs, while the bad mortgages and other debt they embraced gets foisted off on the public.
Fortunately, there's some pushback. It's obvious, and deeply rankling, that Bush is trying to play his usual B.S. game of scaring us silly (Saddam! Mushroom cloud!) in order to get a blank check for whatever crazy scheme he wants Congress to buy off on.
CNN has a poll on its home page that asks whether people agree with the $700 billion bailout. So far 208,000 votes have been cast, 68% (including mine) saying "no."A Washington Post story finds almost universal opposition among ordinary folks to Bush's rewarding irresponsibility. Americans are mad as hell.
Senate Democrats seem to be on the right track. They want the public to have an ownership stake in the companies that are being bailed out by taxpayer dollars.
Sure, why not? Then we can fire the idiots who got us into this mess, cancel their severance packages, and get some real social benefits out of the socialization of the financial sector. Since we're headed toward becoming the United States of France, let's go all the way and really embrace the goodies sound public policies can bring us.
Like, a decent health care system. It's crazy that Bush has resisted government getting more involved in assuring that Americans have access to affordable health care, but he's willing to spend hundreds of billions in a giveaway to Wall Street.
Obama, smartly, is starting to hammer away on the connection between health care and the Bush-McCain love of financial deregulation.
If you think the mortgage market is screwed up after eight years of Bush's whatever attitude, imagine what will happen if McCain gets to carry out his plan to bring the same laissez faire approach to the nation's health care system.
Any bailout plan has to be structured around a central core of outrage. The screw-ups have to get screwed, or they'll just keep on screwing up – knowing that there's no downside to failure if you're part of a big financial institution.
In an interview economist Dean Baker tells it like it is.
Well, we've been knowing since six years. The basic story was, we had a housing bubble, which, again, these people are supposed to be smart. They're paid tens of millions of dollars. They should have recognized the housing bubble. They should have recognized that house prices would fall, as they have been. And what that meant was, you made a loan on a house for $250,000, $300,000, $400,000, that house price was likely to fall. So if you did that with zero down, as many of them did, plus having mortgages, you know, the predatory mortgages, the subprime mortgages that have got them in particular trouble, these were guaranteed to go bad in many cases.
They acted as though house prices would just keep going up forever, and they could just keep, you know, going along these lines. They leveraged themselves to the hilt. The investment banks, like Lehman and Bear Stearns, leveraged themselves to a ratio of thirty-to-one. In other words, if they had $10 billion in capital, they had loans on the order of $300 billion. I mean, this was just asking for disaster.
And, you know, again, it did collapse. It was totally predictable it would collapse. You know, I didn't know when, didn't know exactly who, but it was totally predictable. And now they're running to us and asking us for handouts. Think of what we do to welfare people, when they—you know, everything they have to go through to get, you know, a $500-a-month check, and these people want billions, no questions asked. Unbelievable.