Nader brings up a terrific question here. He asks us:
Ask why they (our politicians and government officials who approved and wrote the bailout) didn’t require speculators to fund their own bailout while you, the taxpayer, pay 5-10 percent sales tax for necessities. Speculators buy $500 trillion of securities derivatives each year and don’t pay one penny. A mere 1/10 of 1 percent sales tax on purchases of these derivatives would raise $500 billion per year to pay for their bailout. Let the speculators fund their own bailout.
http://www.huliq.com/1/69937/nader-blast-congress-approving-backwards-bailout-bill
Also, Paul Craig Roberts, former assistant secretary of the Treasury under Reagan points out why Pauson’s bailout of Wall Street is a massive fraud against the American people:
The bailout is focused on the wrong end of the problem. The bailout should be focused on the origin of the problem, the defaulting homeowners. The bailout should indemnify defaulting homeowners and pay off the delinquent mortgages. As Koppell and Goetzmann point out, the financial instruments are troubled because of mortgage defaults. Stopping the problem at its origin would restore the value of the mortgage-based derivatives and put an end to the crisis.
This approach has the further advantage of stopping the slide in housing prices and ending the erosion of local tax bases that result from foreclosures and houses being dumped on the market. What about the moral hazard of bailing out homeowners who over-leveraged themselves? Ask yourself: How does it differ from the moral hazard of bailing out the financial institutions that securitized questionable loans, insured them, and sold them as investment grade securities? Congress should focus the bailout on refinancing the troubled mortgages as the Home Owners’ Loan Corp. did in the 1930s, not on the troubled institutions holding the troubled instruments linked to the mortgages. Congress needs to back off, hold hearings, and talk with Koppell and Goetzmann.Congress must know the facts prior to taking action. The last thing Congress needs to do is to be panicked again into agreeing to a disastrous course.
While you and I disagree about Hugo Chavez, I’m in complete agreement with you on the economic bailout. I’m not sure it’s even necessary, and if it is those responsible should be paying for it, and not by telling us the “toxic loans” will turn out to make money for the taxpayers. Taxing financial transactions seems a reasonable way of recouping taxpayer losses in this “heads I win, tails you lose” market.
I’m glad to find common ground with you Capt. Jack. This suggestion by Nader sounds an awful lot like the Tobin tax, which idea got it’s creator a Nobel prize in economics. It is a 0.1 to 0.25% tax on foreign currency exchange transactions. These sorts of ideas would be a great remedy for the problems we have now. You can find out more at:
http://en.wikipedia.org/wiki/Tobin_tax
or:
http://www.halifaxinitiative.org/index.php/Pub_TobinTax_Research/326
Thanks for stopping by Capt.
Why has this idea been swept under the carpet by both parties?
Good question Ron. Any answers?
I just replied to this but I don’t think it went through.
I have no answers. I’ve emailed O’Reily, Hemmer, Dobbs & Senator McCain, no replies. I have to assume wall street has everyone under its thumb. The average person has no idea what a derivative is, much less how much they have cost them as tax payers. One argument I hear in opposition to taxing derivative trading is that it will hurt our 401k plans. I don’t think stocks and bonds are classified as derivatives so I doubt the average 401k would be affected much. Some how we have to get Americans informed and stirred up about what wall street is still up to.
Nader and Roberts have written more lucidly on the current economic crises than anybody else, at least within the confines of the capitalist box, i.e. those who take for granted that it would be good to save some form of regulated capitalism.
I wish Bill Moyers would get one or the other or both of them on his weekly Journal. I have emailed the suggestion, but have never gotten a response.
Roberts brings out the bigger picture of how all the off shoring of production and the war profiteering have made the bankruptcy of our country inevitable The fraudulent financial gambling sector of the economy is just the gust of a breeze that toppled the baseless house of cards. Fixing it is necessary (if we are to continue with capitalism) but we are too far gone for it to be sufficient (to restore “economic prosperity”).