Joan Vennochi: Hanging the little guy out to dry

[babylonsister]

The Boston Globe
Hanging the little guy out to dry
By Joan Vennochi
September 21, 2008


WHEN YOU are too big to fail, you are bailed out.

When you are too small to save, you are down and out on the street.

Some aspects of the Wall Street crisis are tough to understand. But one economic principle is pretty clear.

When a really big company goes bust, the little guy pays with his home or job. But those CEOs and money managers who boldly march their corporate empires into bankruptcy just get paid millions and millions of dollars more.

From Washington, inconsistency is the policy order of the day.

President Bush lurched briefly into the spotlight, turning from a repressed memory into a poor excuse for a Harvard MBA.

In just the past week, the federal government let Lehman Brothers Holdings Inc. fail; applauded a merger between Merrill Lynch & Co. and Bank of America; then turned around less than 48 hours later to bail out insurance giant American International Group Inc.

Before that, bailouts rescued Bear Stearns, Fannie Mae, and Freddie Mac. Each was deemed too big too fail.

But no one wants to help taxpayers who are losing homes and jobs. In the grand scheme of American capitalism, they are overreaching specks, too stupid, presumptuous, and inconsequential to spare.

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http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/21/hanging_the_little_guy_out_to_dry/?s_campaign=8315

[AndreaCG]

1. The Boston Globe has quite a few fine columnists

It's worth going there once a week and catching up with them.

[meow2u3]

2. What's next? Bring back debtors' prison?

Rethugs want to make poverty itself a crime.

[Waiting For Everyman]

3. Well...

They could just think of all of us millions of little people as a corporation too, and that would make us way too big to fail.

I'd call millions of foreclosures ALREADY vast. And 4-5 million more coming. That is the story which is driving all other stories. There is no excuse for letting this burn.

Homeowners already lost $2 trillion in equity. That's quite a number for little people. And no end in sight. We need a moratorium on foreclosures now - for at least 6 months - with mandatory workouts by guidelines enacted in law, and bankruptcy changes. That could've been done a year ago, or more. But of course, we couldn't have any controversy like that get in the way of an election. Oh, no!

Well that will have to be done first before anything else can be fixed. Any money thrown at bailouts until then is money thrown to the wind. They may as well put it where it'll do something - in relief for homeowners and other debtors. And what the heck is the point of stimulus checks instead of fixing that? Geez. That's a drop in the bucket compared to gouging interest, gas and food prices.

Congress could say, "ok kids, interest is now capped at 5%". Some people would be making a little less than they expected. But a lot more people would be surviving, which would jump start the economy. All it would take is some guts and hardball.