Sacred Ground

People are talking of “sacred ground” at the opening of the Holocaust Museum.  It might better be called scared ground.  It feeds our fears and supports wasteful spending on airport security.  Do we really think terrorists will attack airplanes again, when there are plenty of other easy targets such as shopping centers as is being done in many countries?  My heart goes out to the victims’ families, but we need to stop crying and ask why it happened.  Why are we so hated that people are willing to take their own lives to harm us? We are arrogant, militaristic bullies.

Stock Prices and other Nonsense

The stock market is at an all-time high with the Dow Jones at 16,695, while the economy is mixed and lots of unemployed are hurting and the housing market is still weak. There seems to be a lot of money sloshing around.  Its owners do not want to accept the low returns from ordinary investments so are seeking high returns from those more risky.   

     Big companies are using their profits to buy other companies.  AT&T is willing to pay $50 billion for DirecTV.  The Republicans say that we can’t tax these profits because they provide jobs.  Bloody nonsense!  Many companies are cutting R & D spending.  More than a quarter of the 121 companies in the S&P 500 reported spending less than they did last year. (USA Today)  Investors rewarded these companies with higher stock prices.  Everyone knows that if you cut spending, you increase profits!  And their CEOs are paid big bonuses for this logic.

Bank Bailout in the Paper Economy

Timothy Geithner, former Treasury Secretary, has written a book explaining that he had no choice but to bailout the banks at taxpayer expense to prevent the country from falling into deep depression after the crisis of 2008.  Bunk.  There were other alternatives. Bad loans could simply be written off were it not for a rule that says the losses must be a charge against the bank’s assets.  If a rule is a problem, change it.  Another alternative was to nationalize the banks as at least one European country did. 

      You might think that a banker would understand that money created by a loan is just paper.  That paper could be disavowed, and the banks start over.  Likewise for the home owner—the mortgage terms could be rewritten to reflect the new lower value of the property and with new current interest rates. 

      Instead of this sensible policy, we persuaded somewhat more sound banks to buy the insolvent banks creating still larger banks too big to fail.  And, we enabled the management of these banks to pay themselves absurd salaries helping contribute to the increasing inequality we see today.  The home owners that could afford to barely continue paying to avoid default would be spared the agony.

      I described the above to a member of the Board of Governors of the Federal Reserve some years ago.  He said the idea was sound, but they did not have the legal authority to do it.  Was he making any attempt to change the law?  NO.  To do so would be radical and troublesome.  Geithner, Summers, and Paulson were all bankers who do not understand or admit to the essentials of banking.  They were and are incapable of thinking outside the box.  I hope someday that their narrow thinking will be placed alongside the tragedy of the Easter Islanders who cut down all of the trees on their island to build customary bonfires to their gods—only to find that erosion destroyed the island and their pathetic culture. 

     Note-- If this blog does not create some comments, I will be depressed.