Wed 24 Sep 2008 07:35:39 AM PDT
Letter to Representative Stark
The Honorable Fortney Pete Stark
39300 Civic Center Drive, #220
Fremont, CA 94538
Dear Representative Stark:
I'm writing to ask you to vote against corporate welfare whenever you see it, and especially the proposed $700 billion Wall Street bailout. As Woody Guthrie sang, "Well, as through this world I've rambled, I've seen lots of funny men. Some will rob you with a six-gun, and some with a fountain pen."
Please disregard the whining from the "Bonfire of the Vanities" types, and their threats to collapse the financial system unless they get a handout. The answer should be, "Fine. Collapse it already. Productive individuals, companies, and the remaining sound local banks can build a new one, without you."
You have to play hardball with these people. They treat anything else as weakness.
After Congress passed a Medicare drug plan that doesn't even let the government negotiate on price for drugs, every other industry is seeing Congress as sheep ready for shearing. If Congress can't negotiate anything better than "$700 billion for you, nothing for me," then I am willing to come out there at my own expense and do it for you. Let me know.
When a kid threatens to break his toys unless he gets ice cream, no ice cream for him. Unless Congress can learn what every parent knows, before this asinine plan passes, the moral hazard problem will only get worse. With the $700 billion in hand this year, the investment bank clowns will blow it on another round of gambling, then come back to taxpayers for trillions next year.
Don't buy the argument from bailout cheerleader David Leonhardt at the New York Times that the "assets" taxpayers get for their $700 billion will have significant resale value. If something gets dumped on the public sector, it will be about as profitable to resell as one of those vacation timeshare rip-offs.
In the long run, it would be better to write off the whole Federal Reserve system, and build a new central bank and regulatory agency from scratch, than to continue to feed the expectation that gains are private, and risks belong to the taxpayer.
The other problem with the handout is that it encourages lenders to destroy the real houses and apartments that all these financial shenanigans were about in the first place. Foreclosed houses fall apart and become vandalism targets, for lack of maintenance and attention. All while people who are willing and able to keep them up are living on the street.
Here's a simpler bailout plan, and one that focuses on solving the problem, not paying speculators for failing to see it. If you're going to have the public sector in the housing business, use the people in the public sector who are already set up for it. Lend the money to local public housing authorities to buy foreclosed properties to use as rentals, with the requirement that if a tenant can make a solid offer on the property in the future, the tenant can buy it. That keeps residents in houses, so the real assets don't fall apart while people talk about paper ones.
Please let me know if there is anything I can help with.
Donald B. Marti Jr.