I saw a photograph today – a man holding a banner that read “[expletive] jump!” – beneath the hallowed halls of a Wall Street tower. It was sent as a joke, but the message was clear: a huge segment of Americans thinks the government is seeking to bail out “them.” “Them” is bad folk, who for reasons of greed and power, created an artificial market that eventually and justifiably collapsed. “They” deserve to be punished, even go to jail, and if our pensions suffer a bit for while, it’s got to be worth it.
And that’s the problem with the government’s plan. The order of the fix just looks bad. The theory is to shore up the institutions, revive the fundamental borrowing power that is the life blood of American commerce and homeownership, and the new stronger structures will then resuscitate the poor homeowners whose property values have been driven down, who cannot get loans for simple business needs or to buy or sell a home.
The problem is one of perception. Because the plan does not start with the homeowners, placing some kind of moratorium on foreclosures, the “bailout” is not viewed as one that helps the common man, the small business or the homeowner… even if that will be one major result of the current proposed legislation. The fact that small businesses pay their employees from receivable financing, that jobs depend on borrowing power just to exist, that real estate has no value if no one can buy it and the fact that growth-directed investments – the kind that create jobs – cannot operate in a vacuum without lending ability, well, the legislation on the table pumps money into the institutions, so the fact that Main Street benefits just as much as Wall Street seems totally lost.
As I’ve said before, if homes lose more value, then the mortgages that the government is buying in a bailout have to be worth less too. Foreclosures kill home values, so we better start there. The message is better too; it doesn’t look like greedy pigs are getting a second helping. The “institutions” – the “them” – have to come second. The punishments for failed management and misleading the public into this mess need to be clear to the electorate. And right now, we need some major remedial economic legislation, if for no other reason, to begin to rebuild the economic trust that vaporized in the last few weeks… a trust that must exist if we are to have a viable economy.
I’m Peter Dekom, and I approve this message.