Crap! I Think I Agree With Lou Dobbs.

Like everyone else on the planet I have logged uncountable hours lately watching breathless business and political reporters drone on about the merits of the proposed bailout of the financial markets.  I even watched as I was stuck on a treadmill recently while a TV was tuned to The Lou Dobbs show on CNN.  Now its not that I usually disagree with Dobbs.  Actually I so despise this annoying, sanctimonious, narrow-minded jerk that I find it hard to listen to what he has to say.

 

However, I agree (please don’t tell anyone) that Dobbs is right in his opposition to the proposed bailout.  In this case, as in most cases, two wrongs don’t make a right.  Throwing hundreds of billions of dollars at financial institutions that are the primary cause of this mess is not a sensible approach.

You first have to question whether the government should do any sort of emergency bailout.  With the country mired in debt, how can adding billions more be a good solution?  This debate has been waged and I come down on the side that some sort of intervention is the correct course of action.  Just not this bailout proposal.

Unless something is done banks will not be able to loan money to local businesses, and many will close, deepening the current crisis.  Consumers will not be able to buy houses so the housing market, the genesis of this problem, will continue to stagnate for years.

The problem with the bailout bill that was approved by the Senate, and is pending a vote by the House, is that it primarily provides relief to banks and financial institutions in the belief that once they unload their bad loans on taxpayers they will resume lending to businesses and consumers and the economy will recover in short order.  Not likely!  The U.S. economy is driven by consumers who purchase goods and services, creating demand for companies that provide those goods and services.  If there is no relief to consumers, who most experts agree drive 70% of our economy, relief to banks is just bailing out the bad guys who created this mess.  Instead the government needs to start by bailing out Main Street, not Wall Street.

My proposal is this: spend the same amount of money – maybe even less – but allocate it a different way. First provide relief to homeowners who are struggling with their mortgage payments.  There are many ways this can be done, through tax deductions for homeowners or by working with mortgage lenders to buy down adjustable rate mortgages and locking in at the “teaser rates” on adjustable rate mortgages sold to sub-prime homeowners for 10 years.  Fewer people would then default on their mortgages and banks will experience fewer bad loans.  If those homeowners can once again pay their mortgages, they may also spend money on items that make our economy work.  

The remaining bailout funds should go towards improving our nation’s infrastructure.  This is a huge need that must be addressed and, in doing so, will create jobs, which will increase the money flowing from Main Street into the economy.  Who knows, maybe some of the people who get these jobs will buy houses, cars, appliances, and other items that will improve the economy while updating our infrastructure for the next generation.

Or we could give all the money to banks.  I’m sure they will spend it wisely.